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‘FSA and FOS should be dismantled’

The FSA and Financial Ombudsman Service should be dismantled and the Financial Services and Markets Act repealed, according to the IFA Defence Union’s submission to the Tory’s economic competitiveness review.

The IFADU was asked by Tory MP John Redwood to submit a paper as part of his group’s review of economic policy, which is set to report to Conservative leader David Cameron next summer.

IFADU chief Evan Owen says the nine-page initial paper sets out what he believes is the only course of action available to undo the regulatory damage inflicted upon the industry by successive Governments over the years.

The paper proposes closing down the FSA and replacing it with “less unwieldy” separate bodies on the retail side to regulate product providers and advisers.

Owen says “pruning and selective lopping” of the regulator will only result in later growth reverting it to type and so a more radical solution is required.

The paper calls for the FOS to be scrapped and replaced by tribunals made up equally of consumers and advisers.

It says the tribunals should be based on established UK law and both parties should be allowed recourse to the courts if they believe the decision is wrong.

It also calls for a £50-£100 refundable complaint fee to be paid to reduce fraudulent and opportunistic complaints.

The IFADU paper says the current Financial Services Compensation Scheme should be replaced with an insurance fund paid for by a combination of the redirection of premiums paid for PI insurance and a product levy.

Owen says: “The regulatory reaction to perceived problems discovered after the horse has bolted is a major problem for UK plc which has been made worse by regulatory interference with products and markets over the last two decades and now with the rush to find the new big idea for the promulgating of financial advice. These radical proposals seem to us to be the only way of remedying the situation.”

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