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Flight says IFAs are being phased out by regulation

Conservative Party deputy chairman Howard Flight claims there is an unspoken objective to phase out IFAs with excessive regulation.

Flight says regulatory issues mean that retiring IFAs are finding it hard to sell their business due to concerns about negligence and the current levels of professional indemnity cover. He blames the FSA and the Treasury for the increase in the regulatory burden that is making it difficult for IFAs to do business.

Flight says his view is reflected by IFAs in his constituency who have come to him with grievances.

Aifa director general David Severn says firms must be able to do business without the fear of regulation coming back to haunt them in the future.

Severn blames the unintended consequences of FSA regulation which have left small businesses to deal with the increased costs of PI cover and levies.

Flight says: “IFAs are having a nightmare. They are an ageing breed who cannot sell their business as no one wants to buy it even though they are clean as a whistle.”

David Severn says: ” I would not go as far as Howard although many people would say that is the case.”

FSA spokesman Robin Gordon Walker says: “Nothing that we do is designed to drive people out of business although market forces can have an effect. We must deliver our stated objectives but understand the current burden on smaller firms and will be announcing a project in the near future to lessen this.”

A Treasury spokesman says: ” The Government is conscious of the need to pay due regard to the concerns of small businesses and the FSA is now working with the practitioner panel to estimate the total costs of financial services regulation, with a particular emphasis on small firms.”

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