The European Union, the Tories, the FSA and a whole host of other interested parties have put forward broad industry-wide solutions, but how will these affect IFAs?
Aifa has today put out a white paper on The Future of Financial Regulation. It looks at all the different proposals in the ring so far, and how they might affect advisers.
The trade body is warning that the twin peaks approach, as recommended by Sir James Sassoon, could result in the UK advice market becoming a replica of the EU bank assurance model.
Sassoon’s review of the tripartite regime, commissioned by the Tory Shadow Chancellor George Osborne, proposed separating prudential and conduct of business oversight between two independent regulators.
Aifa says it is also concerned about the negative consequences of other proposals as well.
It look specifically at the “atomised structure”, which calls for a split between conduct of business and prudential oversight. Under this approach COB regulation would be divided into market subsections, which would then report to a self-regulatory organisation and a college of supervisors acting as an alternative to a statutory regulator.
Aifa says there is merit in this approach but is concerned that dividing prudential and COB may lead to a duplication of regulatory oversight. It says firms might face multiple visits from separate regulators, rather than having an integrated approach which could lead to higher costs for advice firms.
One alternative course of action that has not been widely touted is to leave the system exactly as it stands now. Aifa says there is an argument for maintaining the status quo due to the cost of restructuring the system of financial regulation, which will largely be borne by the consumer.
What do you think? What type of regulation model will best serve the industry and its clients? Should the FSA stay or be disbanded?
Post your comments below.