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Health industry could be the model for regulation

The retail distribution review may recommend an independent council to govern financial advisers, with the ability to strike off those who are not up to scratch.

The professionalism and reputation committee could recommend a single board, made up of representatives of the Institute of Financial Planning, Personal Finance Society, Aifa, lawyers and consumer organisations, to govern the standards of intermediaries and introduce a code of ethics.

The model could work in a similar way to the General Medical Council, which has four functions under the Medical Act to keep an up-to-date register of qualified doctors, foster good medical practice, promote high standards of medical education and deal firmly and fairly with doctors whose fitness to practise is questionable.

The committee has been grappling with issues such as the need for independence and ensuring there is not a monopoly in terms of exam provision. It looks set to be a pivotal committee in terms of the review, with other committees relying on its recommendations.

Last week, FSA director of retail policy Dan Waters suggested the review is likely to call for a clear, graded segmentation of advice from financial planner down to simplified advice as a way of improving professionalism.

IFP chief executive Nick Cann says: “If such a board was created, then independence would be the key. But with genuine independence and representation from across the industry, such an initiative would be a welcome move for driving up professionalism.”

Beachcroft Regulatory Consulting managing director Richard Hobbs says: “It is interesting that more people are making this connection between financial services and health provision. It may be there are some elements of the healthcare model it would be sensible to apply in financial services.”

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