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Wary Aifa doesn’t want it to end in tiers

The Newcob consultation has met with a mixed response, with Aifa cautious about its implications and Which? calling for a cost-benefit analysis.

Aifa deputy director general Fay Goddard supports the concept of a principle-based regime which will provide advisers with greater flexibility.

But she says Aifa is concerned about the vacuum created by the move to principles and says the body does not want to become a second-tier regulator.

She says there is also the worry there could be conflicting or inconsistent guidance from a number of sources with trade bodies, professional institutes and compliance and legal consultants looking to fill any gap. Goddard says Aifa does not want changes which incur costs for firms while not providing extra benefits to consumers.

Goddard says: “There will be different ways in which firms operate but, provided the outcome is satisfactory, the FSA will have to accept these different processes. The regulator needs to demonstrate to the industry that it will be able to do this, otherwise firms will lack confidence in determining how they will apply the principles to their individual businesses.”

Spokeswoman for Which? Helen Ainsworth says the FSA has not proved that scrapping the current rulebook will benefit consumers.

Which? has called on the regulator to conduct a full cost-benefit analysis but FSA chief executive John Tiner told a Treasury select committee meeting recently that such an analysis was not possible.

Ainsworth says: “The FSA has not shown how this will act in the consumer’s interest and we are worried that scraping prescriptive rules could leave consumers with less protection.”

The ABI welcomes the paper, particularly the commitment to less burdensome adverti- sing rules, encouragement for industry-led action and the taking principles forward into the reviews of distribution and advice.

ABI director general Stephen Haddrill says: “Consumers and industry need a regulatory regime that ensures fairness without creating unnecessary cost. We hope the FSA’s propo- sals are the start of a vital move towards principle-based regulation in the retail area. It should deliver benefits for the consumer and the industry”

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