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Treasury raises IFAs’ hopes on Mifid exemption

The Treasury will consult on plans that Aifa hopes will save IFAs thousands of pounds in PI cover by making them exempt to a new European law.

Financial services firms will be asked for their views on ruling out intermediaries from the Markets in Financial Instruments Directive, which will come into force next year.

Mifid means that from April 2006, firms would need 500,000 in extra cover and set aside 30,000 capital or have a combination of the two in place.

As currently drafted, it will affect all securities and futures firms, alternative trading systems and investment exchanges and is designed to improve price transparency on collective investments. Any firm that deals with collective investments, including equity Isas, will be hit.

Aifa has spent a year campaigning for a change to the rule and wants the European Union to make intermediaries exempt.

The Treasury consultation has opened the door to a possible exemption for IFAs.

New Aifa director general David Severn thinks that an exemption would be a vic-tory but the battle of limiting the impact of many EU regulations would not be over.

Severn says: “The Treasury announcement to consult is a welcome and sensible decision. If carried through, what it will mean in practical terms is that most IFAs will be exempted from a raft of new EU requirements and in particular from PI requirements.”



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