The Association of Independent Financial Advisers (Aifa) has argued the Financial Services Authority (FSA) is ignoring the role of providers in product failures and demanding an impossible standard of advisers in the wake of the Arch Cru and Keydata scandals.
Reiterating concerns raised in its submission to the FSA’s consultation on the Arch Cru redress scheme, Aifa chairman John Gummer (pictured) said that the regulator’s stance threatened advisers’ survival.
‘We hope the regulator will recognise that in the aftermath of Keydata and Arch Cru we have to ask ourselves, how do we ensure we don’t have a cost of compensation so heavy that those who have done the right thing aren’t penalised so much they can no longer stay in business?’ he said, speaking at the Aifa gala dinner.
‘We can’t have a situation in which year by year, fewer and fewer people bear a bigger and bigger burden and they are less able to do the job they need to do.’
He argued that the regulator was demanding unrealistic standards of advisers, and that where investors suffer due to changes in a product from the original literature on which advisers based their recommendation, the fault lay with the provider.
‘The idea that a good IFA must be told that he has to second guess the analysts, experts and financial might of a major provider before he can properly recommend a product is to say he cannot do business,’ he said.
‘It is improper to ask of a professional adviser a degree of understanding that the regulator itself does not have. That is the centre of our concern, not for ourselves, but for the future of saving.’
Gummer added that new regulator the Financial Conduct Authority should have its performance reviewed by an independent third party. He said that if the regulator did not publish standards it aimed to meet, Aifa would develop its own standards with which to judge its performance.
‘We will set the key performance indicators (KPIs), publish what those KPIs are and monitor the ability of the regulator to meet those KPIs,’ he said.