09 Jan, 2008
Blackmore - 08-Jan-2008
AIFA has raised concerns over the FSA's Review of Prudential Rules
for Personal Investment Firms, saying the focus is on advisory
firms at the expense of the wider market.
In its response to the review AIFA criticises the FSA for not
fully addressing the real debate about the purpose and role of
capital and its general lack of understanding of the IFA sector.
AIFA also calls for its 'Stakes in the Ground' initiative
to be developed into an industry wide project, operating under a
supervisory board including consumer representatives. AIFA believes
this would lead to fewer complaints, a willingness to accept a
statute of limitations and help with financial capability issues.
AIFA deputy director general Fay Goddard says the repeated
inference that firms make conscious decisions on their propensity
to mis-sell and that the capital they hold reflects this is extreme
and does not address the real debate about the purpose and role of
She says: "We feel that the paper contains misconceptions and
contradictions relating to the amount of capital held by IFAs and
the reasons for doing so. We firmly refute the claim that low
capital directly affects a firm's behaviour and leads to a
higher risk of mis-selling.
"We accept that this happens in isolated cases but we have found
no evidence that this is systematic throughout the profession. The
vast majority of IFAs are small businesses whose clients'
interests are closely aligned to their own. They are generally risk
averse and go to great lengths in trying to meet acceptable