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Dangers grow for IFAs as the FSA gets its Act together

In the week Howard Davies was awarded his knighthood, the FSA finally

became “legal”.

The FSA now has an Act complete with coat of arms on the front cover and

IFAs have a great deal to worry about.

The Financial Services and Markets Act, despite the Treasury drastically

underestimating the work involved in writing it, is not all that bad. Money

Marketing can agree with most of the principles it enshrines.

In theory, IFAs can now see in black and white the law governing the way

they do business. In theory. A library-full of secondary legislation is

still to be decided, with only limited scrutiny from Parliament although

the Tories are considering the unprecedented step of opposing much of it.

But in reality, the FSA is only accountable to the Treasury, a Government

department that has demonstrated time and time again its hostility to IFAs.

Worse still, decisions about the detail of league tables, decision trees

and polarisation do not have to be referred to Parliament.

This is where the gravest danger lies for IFAs. These initiatives combined

with kite and Catmarked products policed by the FSA pose a massive threat

to everything IFAs stand for. In effect, IFAs are being regulated by an

organisation which is increasingly being handed responsibility for

undermining their businesses.

The FSA may be equipped with a shiny new Act but for IFAs there is a

fundamental contradiction at the heart of the organisation and everything

it does.

Resolving this contradiction is probably beyond anyone who works at the

FSA, evena knight of the realm.

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