The Association of Independent Financial Advisers (AIFA) has proposed the idea of ‘customer agreed liability' as a way of tackling the absence of a 15-year long stop on complaints.
Under the system, clients and advisers would ‘sign off' on advice given up to a particular point, for example when the customer reaches retirement.
In this situation, they could declare that they were happy with the investment advice given in the accumulation phase of their plan.
The proposal was made in a report issued by the trade body this morning, in partnership with Zurich, dealing with the issue of open ended liabilities.
Other options include:
- A straight 15-year cap on liability
- Different limits depending on the nature of investment. For example a limit of 10 years for a short-term investment (0-5 years) and a limit of 20 years for a long-term investment (15 years+)
- Extended recourse - any advice is subject to a 15 year limit, but long term investment should be subject to periodical review where the limit is extended from the point of review. This means customers are encouraged to take responsibility for ensuring their investment are meeting expectation.
Presenting the ideas this morning, Zurich intermediary sales director Richard Howells attempted to tie in the idea with the Retail Distribution Review.
He said: "We know we've got consumer-agreed remuneration, so why not have consumer-agreed liability?
"There are certainly points in the advice process where we could start to introduce this concept."
While much of the focus on the debate has often been around calls for a 15-year long stop, AIFA policy director Chris Hannant explained why other options should be considered.
"You can construct different ways of capping liability that takes account of some of the long term products that people are buying," he said.
"It just takes a bit of imagination and we think some of the options go long way to doing that."
