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Cap-ad changes will hit new model firms

The Institute of Financial Planning says that adviser firms looking to move to a recurring income stream will be hit hardest by the FSA’s proposed changes on capital adequacy.

IFP chief executive Nick Cann says he is concerned the new expenditure-based requirements favour traditional commission-based firms, which have lower costs, and discourage a move to a new model.

Perception Support chief executive Phil Billingham, who is an IFP board member, says one solution would be for firms to be able to show six or 12 months ren-ewal or trail income as a short-term debtor and base capital adequacy requirements on this.

He says: “This could easily be monitored through the RMAR/ Gabriel reporting mechanism and validated through normal FSA visits. The good guys will easily pass this test already. All other firms will be so much more incentivised to continue to change their business model.”

IFP president Barry Horner says: “The firms that have transitioned to a fee-based, recurring business model focused on delivering client service through a team approach should not be put at a disadvantage under the new FSA proposals on capital adequacy.”


Soft sterling brings big rise in PI premiums

Professional indemnity insurance premiums will rise by 15 to 20 per cent next year or double that if the market hardens after the FSA confirmed it will raise minimum cover requirements, says PYV.

Relief map

The new 45 per cent income tax rate announced in the pre-Budget report caused many a journalist to scurry for their pen, keyboard or dictating machine to pour out their hearts on the merits of investing in a registered pension scheme, including the apparently obvious opportunity for salary sacrifice with even greater tax and National Insurance benefits than under the current regime.


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