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Kenmir and Smee clash over the future for IFAs

The financial services industry is in the midst of a major

contraction in the number of IFAs, says FSA head of investment firms

David Kenmir.

Speaking at a panel session at the LIA conference in London last

week, Kenmir said, due to a number of factors, including the PI

crisis, which he is charged with dealing with, and changes to

polarisation, more IFAs are leaving the industry.

But this has been challenged by Aifa director general Paul Smee, who

concedes the industry is facing significant change but says a strong

demand remains for independent advice.

Kenmir said: “I think we are part-way through a major contraction in

terms of the IFA market. This is due to a combination of equity

rates, the 1 per cent world and demographics. The challenge over the

next 10 years or so is what is going to replace the people who are

going to retire.”

But Smee says: “It is clear the industry is in a state of flux, not

least because of regulatory chan-ges by the FSA. However, the demand

for independent advice does not seem to be affected by these changes

and the regulator cannot reverse the basic rule of supply and demand.”

Michael Philips proprietor Michael Both says: “The FSA has caused the

PI crisis in no small measure and, as a consequence of not being able

to get PI, many people have decided to leave the industry.”

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