Advisers query EDR notice periods

Advisers shifting dispute scheme have been surprised to discover that, in many cases, they have to give a full year’s notice, but one provider says it gives protection to consumers.

Wednesday, August 29th 2018, 6:00AM 4 Comments

by Susan Edmunds

All registered financial service providers must be a member of an external disputes resolution scheme. Financial advisers are members of IFSO, FSCL and FDR.

Non-profit schemes IFSO and FSCL each require 12 months’ notice to move to a new scheme, while FDR requires three.

FDR client director Trevor Slater said advisers had told him they thought long notice periods were unfair.

But FSCL chief executive Susan Taylor said it was because, if there was a complaint about an adviser, the conduct or advice being complained usually happened years earlier.

“Often it’s not until an insurance claim is declined, for example, that the client wishes to make a complaint about the advice received from their adviser some years earlier. The notice period allows a 12 month run-on period for a consumer to be able to make a complaint, if they wish, against an adviser who has left the industry (much in the same way as with most PI insurance policies, there is a run-on period).”

She said FDR could not consider a complaint about advice that happened before the adviser joined the scheme, and the notice period helped to counteract that.

"The 12-month notice period allows the consumer some protection.  However, once the notice period has expired, the consumer may be left without access to a dispute resolution scheme for a period of time. Clearly, that is not the intention of the legislation, nor a good consumer outcome."

The schemes all offer free membership to those who switch, to cover their notice period at their previous scheme.

Slater said FDR would also sometimes waive its notice period for members who left because they were dissatisfied.

"We can accept any complaint made against any member of Financial Dispute Resolution Service as soon as they are members of our Scheme. As is the case with all Schemes complaints can be accepted in any situation if all parties agree. I don’t believe that those advisers and financial service providers who have made the choice to move FDRS based on their view on the services we offer would suddenly object to us dealing with a complaint based on a technicality.

"However, I thank FSCL for providing a view on our Scheme Rules  so that we can clarify the situation for current and potential new members.

Taylor said FSCL too would sometimes waive or reduce the notice period, according to the circumstances.

“For example where an employed adviser changes employers and their employer is with another scheme, or an adviser is ill and unable to work.”

Tags: disputes Fairway FSCL

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Comments from our readers

On 29 August 2018 at 8:40 am Dirty Harry said:
"She said FDR could not consider a complaint about advice that happened before the adviser joined the scheme"
That's a big claim. Please clarify or re-state. Because it sounds lik, on the one hand she thinks claims will often come about from advice given years - plural - earlier. So if even a whole year of noitice for those situations is insufficient then surely there must be other rememdies?
Clearly that statement is simply wrong.
Furthermore, after making these statements showing such concern for the "good outcomes" for consumers, the final sentence seems to run against that - poor conduct usually happens while an adviser was healthy!
On 3 September 2018 at 9:45 am LNF said:
How did the description "Dispute" morph into Complaint. It is meant to be a "Disputes Resolution" but now for some it is a complaint process. The Disputes Tribunal, part of the Courts, does not hear complaints, they handle Disputes so why has some in this industry branched into pacifying complainants
On 3 September 2018 at 5:07 pm Murray Weatherston said:
I would have thought a dispute was simply a customer complaint that had not been resolved by the adviser and her client, and had therefore passed through onto the EDRS.

I do not see why an adviser should have any period of notice
(a) when they have no outstanding disputes in the old EDRS AND
(b) they have been accepted into another EDRS.

Her clients will not be disadvantaged, as they have the benefit of the new EDRS.

Surely the EDRS with jurisdiction is determined on a "claims made" basis irrespective when the original issue out of which the original complaint arose occurred.

The adviser was with A up until 1 September 2018. On 1 September they joined EDRS B. On 5 September, client complaint can't be settled by adviser and client so gets referred to EDRS B

If adviser had current case being handled in EDRS A at 1 September, they wouldn't have been allowed to transfer to EDRS B until all outstanding disputes had been determined.

In this light in these circumstances, even Trevor's 3 month period seems protective of the old EDRS, though not as harsh at the others' 1 year period.

I concede the situation might be different when the adviser is exiting - but if aim is to protect the client, why would 1 year be enough; Statute of limitations is ? 6 ? years.
On 4 September 2018 at 9:17 am Barry Read said:
I can't see anything in the act or regs about this. I agree Murray that the EDRS at the time of the complaint should handle it, their is nothing linking the date the issue was caused with the EDRS at the time, except maybe in the schemes own terms of reference.

I think it is a commercial decision to have the stand down period, which is strange for a not for profit organisation. Maybe FSCL want to ensure they have enough money for their next court bid to change their name to ombudspersons or something?

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