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.”