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Don’t put out sale signs yet

Clerical Medical says advisers who are not prepared to meet the requirements of the retail distribution review should consider selling up now before the review leads sale prices to fall.

It also says that networks will not be in a position to help.

This is a grim message and all the more so given the nonsense the regulator has been talking about how we are in a discussion stage rather than a consultation stage with the RDR and capital adequacy papers.

The two challenges that advisers seem to be facing are increasing their levels of qualifications and increasing capital adequacy to some as yet unstated figure.

At stake are adviser businesses but also access to advice for most of the British public. Money Marketing is not about to endorse Clerical’s stance. We think there are several factors still up in the air and this newspaper has no intention of giving up trying to demonstrate what a nonsense the proposals are.

Money Marketing is convinced that the details of the reforms are anti-consumer, anti-IFA and probig business. This may become apparent and render the reforms unacceptable.

The EU may stop the FSA from doing what it is doing for that very reason although, crucially, it depends on whether the FSA successfully argues the reforms are beyond the EU’s scope.

The changes threaten to set up a banking and life insurance cartel in all but name. Surcharges on plane tickets will be small beer compared with what we suggest will be inevitable price rises for advice and products but it will be just about unprovable under the FSA’s planned system.

The competition restrictions, including barriers to new entrants, created by this reform will see those of the maximum commission agreement and polarisation pale into insignificance. But whether the competition authorities wake up to this in time is a moot point.

The Government has form in making things tough for small businesses so it may push the FSA to drive through these plans.

We do agree that every advice business and adviser should be undertaking a strategic review. Maybe advisers should consider any offers but it is not time for a fire sale.

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