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Advisers could be pursued for liability to the grave

Aifa has warned that IFAs could be hounded “from authorisation to grave” if the proposed independent professional standards board has the power to hold individuals liable for advice.

Policy director Andrew Strange is calling for clarity over whether complaint handling will remain solely a company-based requirement under Disp or if the standards board will police personal liability.

He says: “Firm-based regulation with the FSA allows for limitations of liability through company formation, individual advisers authorised through an IPSB may not. Considering that the FSA states they are unable to justify a long stop, we have serious concerns over the monster that we could unintentionally create.”

FSA retail managing director Jon Pain told Money Marketing at last week’s retail distribution review conference in London that the crossover implications for complaint handling had yet to be determined.

He said: “That detail will emerge in the next stage. Clearly, the standards board will set the framework of the ethics and standards in line with the rules governing the market from ourselves and they will be aware of the Financial Ombudsman Service stance as well.”

Aifa has also warned that the new expenditure-based capital requirements could be counter-productive, with firms cutting back on compliance support to lower their requirements.


Spread the risk

For many investors, the recent volatility in the markets has been a wake-up call. We all know that equity markets can fall as well as rise but the extended bull market that we have seen in equities since 2001-02 has lulled many investors into a false sense of security.


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