There is not enough information to allow advisers even to begin to contemplate becoming primary advisers, as the FSA suggests could happen, because they do not know what they can advise on.
There is certainly not enough information about general financial advisers to know if it is a temporary or permanent category, although there is much strong support emerging for this category.
It is also unclear by how much capital adequacy and professional indemnity requirements will increase. In particular, plans to extend cover beyond the life of a business could see PI rise.
All this means that proper business decisions are difficult about how much it will cost to run an advice business.
It is unclear where the qualification bar is to be set for professional financial planner.
There are all manner of questions yet to be answered about how an adviser business with different types of adviser can be shaped under the proposals.
For a minority, there will be an answer. Some advisers may finally tire of the whole regulatory rigmarole and retire. Some may be close to changing the basis on which their business operates – fitting with the customer-agreed remuneration model – and a few papers off achieving chartered status. The answer for this group is to press ahead as swiftly as you can.
For the rest, we do not believe there is enough information.
Is this a bad thing? That depends. The FSA’s work has the status of a discussion paper and that must be a good thing as it should mean that the proposals are likely to change.
But it is also a nightmare for business planning. You may, for example, sit in the GFA category, which will be going to get more expensive but may also disappear – not an easy model to write a business plan for.
We can be is sure of one thing – advisers must respond to the review consultation firmly, sensibly and swiftly.