Written evidence submitted by PanaceaIFA
PanaceaIFA.com is an online community representing
3,000 smaller, directly regulated Independent Financial Advisers
(IFAs). Our members' annual premium income from sales represents
£639.9 million. PanaceaIFA.com aims to give a voice to smaller,
directly regulated IFAs and help ensure their concerns are not
overlooked by policy makers.
PanaceaIFA.com welcomes the opportunity to contribute
written evidence to the Treasury Select Committee's inquiry.
The formation of the CPMA should take
into account the five key principles of the Better Regulation
Legislators should consider the unintended
consequences of regulation on smaller businesses in the financial
services sector, while addressing the failures which lead to the
The CPMA should take a risk-based, transparent,
consistent and proportionate approach in its dealings with IFAs,
something the Financial Services Authority (FSA) has often failed
1. When constituting upon the formation
of the CPMA, and with the smaller IFA firm in mind, HM Treasury
should build on the principles of the Regulators' Compliance Code.
2. The Regulators' Compliance Code is a
central part of the Government's better regulation agenda. Its
aim is to embed a risk-based, proportionate and targeted approach
to regulatory inspection and enforcement among the regulators
it applies to.
3. PanaceaIFA.com's members see the government's
review of Financial Services Regulation as a much needed opportunity
to ensure these principles are applied to the CPMA.
4. While protecting the consumer, such an
approach would deliver significant benefits to low risk and compliant
businesses within the IFA sector through better-focused inspection
activity, better advice for businesses and lower compliance
5. TransparencyThe FSA has
often failed to be transparent. Rules are often unclear, change
frequently and are applied retrospectively. This makes compliance
extremely difficult for smaller IFA firms.
6. AccountableThe CPMA should
be accountable for its actions. Currently the FSA cannot be sued
for any failures and has a record of being neither fair nor reasonable
to the small businesses it has regulatory authority over.
7. ProportionateThe regulatory
costs of resources, reporting, disciplinary action and qualification
levels should reflect fairly and proportionately on small IFA
firms, by giving consideration to the size of the regulated firm
and the nature of its activities.
8. Consistentthe CPMA should
ensure that the nature and direction of regulation is clear for
all to see, by way of rules not principles, and not subject to
knee jerk reaction and changes of direction or policy on a whim.
9. Targetedthe CPMA should
only direct its attention towards cases where action is needed.
The FSA has a history of embarking on "fishing expeditions"
seeking out, even creating problems without thinking through the
impact of its actions. It is therefore important that the CPMA
builds confidence and trust with the consumer and the IFA community
in its ability as a regulator to carry out its role correctly
and in a fair and reasonable way.
10. Key staff in the CPMA should be required
to gain financial services qualifications to better understand
the markets in which they are operating.
22 September 2010