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Tories writing to all IFAs on FSA dangers

The Conservative Party is writing to all IFAs, spelling out the dangers to

their business from the FSA.

A letter has gone out to every constituency office in the country, urging

its members to write to IFAs telling them how the Financial Serv^_ices and

Markets Bill, which puts the FSA on an official footing as a regulator,

will be damaging to them.

It means that the plight of the smaller IFAs is set to become a key

electoral battleground following the Tories&#39 decision to target the bill as

a Government liability.

Written by front-bench Treasury spokesmen Howard Flight and Andrew Tyrie,

the letter raises the spectre of “over-regulation” and “injustice”. It also

includes points raised by colleagues when scrutinising the bill during its

passage through Parliament.

Tyrie says: “The key issue is that if you create an environment that is

very heavily regulated, only big firms will be able to survive. The bill

will create barriers to small businesses, which many IFAs are.”

Howard Flight says: “Unless fundamental chan^_ges are made, the regulatory

regime which will be introduced by the Financial Serv^_ices and Markets

Bill could severely damage IFAs.”

But the tactics have been questioned by trade body Aifa, with director

general Paul Smee believing that the
risks to IFAs are not as severe as

the Conservatives&#39 letter makes out.

He says: “It is not as big a risk as these people are saying and I do not

think that we should panic. For a lot of IFAs, this will not have much

impact on their business.”

But Wentworth Rose managing director Philip Rose does share some of the

Tories&#39 concerns.

He fears that one consequence of the bill “could
be that IFA firms are

put out of business by the more
powerful FSA”.

The Tories&#39 objections to the legislation have been long documented.

They are presently eng^_aged in a fight with the Government in the House

of Lords, where the bill is at report stage.

The third and final day of the report is expected shortly after the Easter

recess and will be the last official opportunity to force amendments before

the bill becomes law. Industry sources predict that it is likely to receive

Royal Assent in June or July.

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