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Rights and wrongs

There is no doubt that the Financial Services and Markets Act gives the FSA strong powers. Whether those powers are so Draconian that the European Court decides they breach the IFA&#39s human rights can only be tested by legal challenge.

If FSMA is overturned, the way that the IFA works would be changed for ever -no more retrospective reviews, no longer the threat of criminal proceedings without due process, no charges for spurious complaints. Intermediaries&#39 support for Jon Maguire&#39s challenge to the FSMA, under the banner Justice for IFAs, is born of years of regulatory pressure that has left professional indemnity insurance problems threatening IFAs&#39 businesses.

Maguire&#39s strategy raises many questions. Will he raise the £1m fighting fund? How long will it take to get any real benefit?Will a reduction in the FSA&#39s ability to act unhindered lead to an increase in day to day regulation to compensate? Will the press portray the sector as whingeing? Would a new business environment be more litigious and ultimately more costly to the IFA?

Aifa believes that its measured approach has achieved concessions on both depolarisation and professional indemnity insurance. Maguire&#39s tactics are a straightforward confrontation through the courts. But should challenging a perceived abuse of human rights be seen as confrontational?

The FSMA is undergoing a triennial review and, while some IFAs will want to limit their activities to responding to that consultation, others see the Act itself as fundamentally unfair. These are debates that the industry must have. That IFAs have legitimate grievances with their position in the regulatory framework is without question – the New Year must start with vigorous debate as to how best to address these issues.

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