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Lion and unicorn can&#39t sleep tonight

Now those long summer days are behind us, it is time to get back to the serious business of work. For the Treasury, this is especially true as it has to tackle at least five issues that affect the financial services community.

That is not including the 60-odd pieces of secondary legislation that have to be pushed through Parliament before the FSA finally receives its regulatory authority.

IFAs should be aware of the changes that will affect their businesses in the coming months. Citigate Dewe Rogerson associate director Steve Carey says: “While there are a number of issues of particular concern to IFAs, the question from the Treasury&#39s perspective is which will gain votes in the coming election.”

Topping the agenda is the widely anticipated decision on the future of polarisation. Once the Treasury receives a recommendation from the FSA, which should come within the next two weeks, its announcement will probably follow later this autumn.

The industry, led by Money Marketing, has been fighting for a public debate before any changes are made to polarisation. There have been rumours and speculation as to what direction the Treasury is minded to go but, clearly, its decision will directly affect the IFA market.

Six months ago, the Government announced it was going to introduce regulation of mortgage products. There has been a significant lobby to regulate mortgage advice but, so far, the Treasury has resisted these demands.

The Treasury has promised it will tackle mortgage regulation before the end of the session as part of the masses of secondary legislation that must be passed before the FSA is fully operational.

By most estimates, there are 60 pieces of secondary legislation t
o be passed, most of which are technical, but some like mortgage regulation will have a significant impact on IFAs.

The Treasury is also conducting a review of Isas, which should be published soon. The review is routine but there are hopes within the industry that the Chancellor will simplify the investment wrapper.

Alongside the review is a Government-commissioned report on patterns in the investment marketplace. The McKinsley report will look at the attitudes both of providers and consumers and make recommendations to the Treasury based on its findings.

Autif director of communications Anne McMeehan says: “The biggest complexity is the difference between mini and maxi Isas. There are sound reasons for the difference to exist and, while many companies are calling for one Isa, it would be foolish to dispatch the mini Isa.”

Gartmore chief executive Paul Myners was asked by the Chancellor to head an inquiry into institutional investment. The final report is due in time for next year&#39s Budget but interim findings on the minimum funding requirement for pension funds are due this month.

Myner&#39s view on the MFR could serve as a springboard for the Government to make a move on annuities. The requirement for pensioners to purchase an annuity by age 75 is widely seen as unnecessary. Treasury sources hinted earlier in the summer that the department will relax the rules and this could be an opportunity to do so.

In its response to the royal commission on long-term care, the Government said it would reserve any decision on the regulation of LTC products until a Treasury committee made its report. That report is expected imminently and it is thought the Government will subsequently introduce some form of regulation.

Once the Treasury has resolved these issues, the Chancellor must start working on his pre-Budget speech, to be delivered at the end of this month or early November. One can only speculate at this point but it is likely there will be something in the speech for financial services.

Consultancy Golin Harris Ludgate account director Michael Davies says: “Polarisation and mortgage regulation are the two biggest awaited decisions but it is the secondary legislation of the Financial Services and Markets Act which will dominate Parliament.”

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