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Laundry lockout for IFAs

An industrywide standard aimed at complying with new money-laundering regulations will see at least five major life offices refuse new business from many IFAs from September 1.

The IFA Certificate has been developed by Aifa and the ABI with the aim of helping to collect the information that providers must have on file.

However, the certificate has brought turmoil as many IFAs are unaware of the measure while product providers say they will close their doors to non-compliant IFAs in two weeks time.

Life offices, including Norwich Union, Clerical Medical, Scottish Equitable, Scottish Mutual and Legal & General, say they will refuse to accept new business from IFAs who do not use the certificate to provide personal information about clients in accordance with the guidance set out by the ABI in May.

Axa says it is allowing a three-month grace period while Standard Life and Prudential say they will continue accepting business as long as the required information is there in some form.

The ABI sent out a circular to its members at the end of May stating that the changes must be implemented no later than August 31 and that life offices not able to meet this deadline must discuss the matter with their supervision contacts at the FSA.

Aifa says the scheme is entirely voluntary, with no involvement from the FSA and says it was wrong for the ABI to imply that product providers would have to answer to the regulator for non-compliance.

Momentum Financial Services compliance manager Steve Davie says: “What really perplexes us is that this is supposed to be an industrywide standard and yet they are not all singing from the same hymn sheet.”

Aifa technical officer Linda Chamber says: “I think that the providers are being over-zealous in their interpretation of this. It is certainly not a regulatory requirement for them to have this document.”

ABI head of media and political affairs Alan Leaman says: “It was deliberately phrased in the circular as a recommendation not an obligation. It is clearly a voluntary initiative.”

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