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CII concern at board burden

The FSA’s proposed independent professional standards board will have failed if it becomes a second regulator, says the Chartered Insurance Institute.

At the Money Marketing round table on the RDR and new blood, CII director of policy and public affairs David Thomson addressed widespread concerns about the extra burden the board could place on IFAs.

He said the IPSB should be a mechanism for maintaining and raising standards with a regulatory dividend for advisers.

Thomson said: “The professional standards board should not be a huge monolithic organisation. It should be there to encourage, to develop standards, to ensure that monitoring is being done.

“But it is incumbent on the FSA to create some sort of regulatory dividend. You cannot just create another body with costs without having some sort of regulatory dividend in whatever form. I think the FSA are thinking about it but we have not yet got details.”

Aegon head of industry development Peter Williams said that a regulatory dividend is essential but it must not be in the form of reduced capital.

He said: “People have to know that if they do the right thing there are benefits but it cannot be capital because that could be easier for some firms to get hold of. It should be tied into fees. If you get lower fees because you are doing things right, that is a bigger incentive than say- ing that you need less money in a bank account.”

Aifa director general Chris Cummings warned on the extra costs of the board. “The professional standards board is going to cost money. The industry will have to pay for that at a time when industry money is in quite short supply. I do not know anyone in the industry that is feeling particularly flush at the moment. Times are tough and they are going to get tougher over the next 12 to 18 months.”

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