Law firm Pinsent Masons says the FSA’s proposal to take on governance of professional standards is a “land-grab” attempt to protect its terr- itory ahead of a possible Conservative Government.
In the consultation paper on delivering the retail distribution review, the FSA says it would scrap plans for an independent professional standards board in favour of an internal supervisory model.
The FSA estimates that, while set-up costs for an internal model would be broadly the same as for an inde- pendent board at £2.8m-£3.5m, the internal model will be £1.5m a year cheaper to run than an external model, with annual costs of £3.5m compared with £5m.
Pinsent Masons partner Bruno Geiringer says: “Creating another statutory agency such as an IPSB it seems would probably have led to a most unfortunate precedent for the FSA in view of Conservative statements to split up the regulator, so no surprises that the FSA has gone for the land-grab to protect its territory.”
Aifa director general Chris Cummings says: “We were worried that the extra costs imposed by an IPSB would outweigh any potential benefit.”
But the Chartered Insurance Institute chief executive Sandy Scott says: “An independent body would be better placed to help rebuild public faith.”
The FSA also revealed plans to formally recognise professional bodies that meet certain criteria although membership will not be mandatory for advisers due to barriers in European human rights law.
However, the FSA says it is proposing a new requirement forcing firms to get independent confirmation that their employees have met requirements for attaining and maintaining technical competence.
Where employees are members of professional bodies, the FSA says firms can rely on that membership for confirmation.