He believes that very few prospective buyers would be willing to take on a business with its liabilities in the current economic climate. He added: “If a company is on the market at two times profit with lifelong liability for past advice, where is the value in the business? If there is no long stop, it would be foolhardy to buy any IFA businesses.”
Ernst & Young financial services partner Shaun Crawford said an intended consequence of the RDR may be to temporarily reduce the size of the IFA market.
He said: “The FSA may be using the RDR to temporarily drive people away from giving advice. They are looking for quality in the market, not quantity.”