Institute of Financial Planning chief executive Nick Cann bel-ieves the IFP faces a big task in getting the FSA to ease its new capital adequacy requirements for financial planning firms.
Last November, the regulator announced that all IFAs will have to hold capital worth at least three months of their annual fixed expenditure, with the minimum rising from £10,000 to £20,000.
The FSA was criticised at the time as the proposals appeared to penalise advisers who had invested significantly in back-office staff such as administrators and paraplanners.
At the IFP RDR conference last week, Cann said: “Capital adequacy is an issue we have been very strong on with the FSA but I have to say it has not been of much benefit because the FSA still very much looks at the financial services industry from a product focus.”
Cann suggested the regulator is preoccupied with issues such as commission and rebates, which are not aligned with how financial planners, who have fee agreements in place, run their businesses.
He said: “There is a big piece of work to do to try to get understanding or acceptance from the FSA that there are sufficient business models in place so that the regulator can start to view financial planning firms differently for the purposes of capital.”
The FSA said last November that it planned to consult on the details of its capital adequacy rules this year.
But at the conference last week, Page Russell chartered financial planner Tim Page questioned FSA manager of the retail distribution team Richard Taylor on whether the consultation’s release was imminent. Taylor responded: “Imminent might be the wrong word.”