Financial Regulation: a preliminary consideration of the Government's proposals - Treasury Contents

Written evidence submitted by PanaceaIFA

INTRODUCTION 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. aims to give a voice to smaller, directly regulated IFAs and help ensure their concerns are not overlooked by policy makers. 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 Executive.

    — Legislators should consider the unintended consequences of regulation on smaller businesses in the financial services sector, while addressing the failures which lead to the financial crisis.

    — 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 to do.


  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.'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 costs.

  5.   Transparency—The 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.   Accountable—The 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.   Proportionate—The 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.   Consistent—the 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.   Targeted—the 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

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