The Institute of Financial Planning has called for new regulatory definitions that differentiate firms offering wealth management, financial planning and financial advice services.
Writing in Money Marketing this week, IFP chief executive Nick Cann says the recent Financial Services Compensation Scheme levies are “galling” and “unfair” as advisers are paying to cover the failures of firms that operate in different sections of the market. He says: “Part of my thinking about a solution comes back to greater clarity on defining the roles individuals and firms perform for their clients.”
He noted at a recent meeting of wealth managers that they debated how they were differ- ent to other advisers and should be treated differently. Cann says: “If there is a desire to properly define wealth management as a category that could sit alongside a properly defined financial planner and financial adviser, firms could potentially elect what service they provide for their clients and therefore which segments they are sitting in.”
Aifa policy director Chris Hannant says advisers had to pay for the collapse of Keydata because a firm that should be seen as a provider was placed in the investment intermediary FSCS sub-class.
He says: “You can dream up all these different definitions about who pays but if they are not app-lied, it is pointless. IFAs should distinguish themselves by what service they provide but I am not sure it is something we want the regulator to be involved in.”
Chartered Insurance Institute director of policy and public affairs David Thomson says: “The problem with definitions is, where do you draw the line? You could have a firm that is ext-remely good but is working in risky products as that is their specialisation. What the IFP is sugg- esting is laudable but it does create a new set of problems.”
The FSA declined to comment.