The Association of IFAs is calling for advisers to give their feedback on the capital requirements proposed in the FSA’s retail distribution review.(RDR)
Aifa is asking principals of all member firms to complete an online survey that will form an important part of its research to support its work on the implementation of the review. It will then submit its formal response to the FSA’s Prudential Rules for Personal Investment Firms consultation, which closes on 31 March.
The regulator has proposed substantial increases in regulatory capital for all IFA firms, with the capital adequacy requirement for sole practicioners expected to double to £20,000.
For larger IFAs, Aifa warned this could be significantly more.
The FSA has acknowledged because of the new requirements “some firms will no longer find it profitable to continue operation”. Andrew Strange, director of policy for Aifa, said the survey aimed to identify both a firm’s current and future proposed regulatory capital requirements
It also considers the availability and definition of capital, as well as the appetite of firms for risk-based capital requirements. The survey will be emailed to all Aifa members for completion on its website and advisers have until 20 February to complete it.
Mr Strange said: “While we are in the midst of many discussions over the finer points of the retail distribution review in advance of June, we must remember that the prudential rules consultation is very much alive and due for final responses by the end of March.
“Aifa perceive this paper to be of significant importance to individual firms and the profession overall.
“I therefore personally urge all member firms to complete our online survey, which will provide Aifa with detailed statistics and figures to formulate a robust and comprehensive response to the consultation.
“Aifa is working hard on behalf of its members to ensure the best possible outcome, but we need significant input from firms to deliver results. I am sure that members will feel this is a worthwhile exercise to ensure that the IFA community unites and responds as one voice to the potentially damaging proposals that have been set out.”
Keith Jarman, director of Hampshire-based Hughes Carne IFA Ltd, said: “We will be taking part in the survey and we will be telling the FSA that we think the requirements are unfair as we will suddenly have to find potentially double the capital that we have got currently and we are a very small business.
“Aifa has done a lot on our behalf and we are happy to support them in making their response.”
Source: FT Adviser
Huntswood