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Severn says FSA is a slow-moving glacier

Progress in the relationship between IFAs and the FSA has been a case of one step forward and two steps back, Aifa director general David Severn told Money Marketing roadshow delegates last week.

Severn said recent successes include persuading the FSA to offer a 50 per cent discount to IFAs if they appear in more than one fee block and an agreement from the regulator to review fundamentally the way that the compensation scheme is funded.

But the former FSA business head said he is still finding it difficult to work with the regulator, comparing it with a glacier – slow-moving and hard to redirect.

In a wide-ranging speech, Seven said he saw dangers in the FSA’s treating customers fairly initiative because he said it could effectively create rules without going through a pro-per cost benefit analysis.

He also said Aifa would continue to work with the Treasury, Customs and Excise, the Inland Revenue and the DWP, scrutinising plans to ensure that new consultation pro- cesses are really necessary.

Severn said his decision to refer the menu to the Office of Fair Trading showed he would use “sharp elbows” as well as persuasion but warned the audience that a judicial review and legal challenge would be a difficult road to take.

Looking ahead, Severn said Europe was both a big opportunity and threat to IFAs, with around 75 per cent of new regulation coming from Brussels in five years time.

Severn pointed out there will be a window of oppor- tunity to review the cost of professional indemnity insurance cover in the upcoming European finance directive, with Aifa pushing hard to get a review.

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