No excuse for serial IFA offenders - report

The Real Offenders

As the owner of a small IFA practice I find it offensive to call struggling firms "Offenders". The real Offenders are the Regulators who keep changing our goal posts, who pretend to consult and who interfere with markets they clearly do not understand. I could say a great deal more but I think it might be wasted on the people who produce such aidiotic one-sided report. Clearly they are biased and lack an academic approach to the subject of firms under stress. A balanced approach would investigate the reasons why! Were they sponsored by a bank or the FSA?

Posted by: David Chubb

WHAT IS REALLY OFFENSIVE?

I agree with David Chubb the term "offender2 is itself an offensive remark. It is the regulator who are the offenders. According to the Ernst & Young report, the FSA forecasts that almost a fifth of financial adviser firms are now loss-making and a further 24 per cent have reported profits of less than 5 per cent of turnover. The irony is that this is due to the collapse of the banks and falls in the market all on the FSA watch. Instead of regulating the banks the FSA were planning the hand over of IFA distribution to the ver banks they fail to regulate. Don't believe me then go have a chat with Dan Waters FSA, responsible for the FSA's overall strategy! At a time when millions of pounds have been pumped into the banking sector to keep them afloat just look what the FSA is doing to the independent sector, the only sectors proven to have consumer confidence. The FSA have proposed changes to capital adequacy. In spite of the fact that IFA's are bound to hold Professional Indemnity Cover the FSA proposals now say all firms will be required to hold a minimum of £20,000, representing double of the current level of £10,000. This is dead money sitting in a non interest bearing account. With regard to the FSA Retail Distribution Review Ernst & Young's report said: "It is clearly going to put massive additional pressure on smaller and directly-regulated IFAs." The 400 - 500 hours of degree standard professional qualifications proposed under by the FSA Retail Distribution Review, for an industry whose average age is 54 years will also add to these firms leaving the industry and joining the ranks of the unemployed. At 54 years of age and with in excess of 3m unemployed many of these 54 year olds will never work again. Ernst & Young's report says: "Given the changing dynamics we foresee a reduction to approximately 10,000 IFAs by 2013, the majority of this reduction happening towards the end of 2012 but there will be casualties in the shorter term too." NB: This report takes no account of the support staff fall out! If you estimate that each IFA firm as a minimum of two support staff then the unemployment consequences are closer to 30,000 new unemployed people. The FSA Retail Distribution Review also proposes that provider IFA support staff are also to be banned so we can add and few thousand more to this tally. I FIND THIS OFFENSIVE!

Posted by: Simon Mansell