threesixty calls upon IFAs to defend their professionalism

threesixty calls upon IFAs to defend their professionalism

threesixty  has called upon IFAs to step up their opposition to the Retail Distribution Review’s proposal to extend the expenditure based capital adequacy requirement to small IFAs, which poses a major threat to their professionalism.

threesixty has been both surprised and concerned by the apparent acceptance by the industry so far of the proposed extension of the expenditure-based requirements to small IFAs contained in the Consultation Paper 08/20.

David Ingram, Director at threesixty, commented: “These are merely proposals and they are up for consultation, but it is pretty clear that they would result in a reduction in professionalism for some firms as they seek to reduce their costs by, for example, moving advisers to a self-employed contract or cutting back on administrative staff. This is not what the Financial Services Authority is trying to achieve with the RDR, or indeed its policy on Treating Customers Fairly.”

threesixty accepts that increases in capital adequacy requirements for IFAs are inevitable and that the FSA’s estimate that around 75% of IFAs already meet the proposed £20,000 threshold is accurate. But threesixty believes the FSA has failed to appreciate its proposals will reward the old-style, small-scale IFA practices with part-time staff and self-employed advisers at the expense of ‘new model’ firms that employ full-time advisers and back-office staff.

David Ingram added: “We have already spoken to a representative of the RDR team at the FSA who was very receptive to our views. There are some unintended consequences here and we believe that the FSA will take note of them during the consultation process. In saying that it is still vitally important the IFA sector makes itself heard during the consultation period.”