Financial Advisers are being encouraged to write to their MPs to warn about the impact of increased regulatory costs and higher professional indemnity insurance (PII) premiums on the availability of independent financial advice.
IFA David Penney of Penney Ruddy & Winter wrote to his MP to demand action and urged other IFAs on Twitter to write to their MPs as well. His call was taken up by The Personal Finance Society (PFS) which asked its 9,000 members to write to MPs using a template letter published on its website. The Impartial Financial Advisers Association (IFAA) has gone one step further, asking IFAs to write to the Chair of the Treasury Select Committee, Mel Stride.
The PFS has proposed that the regulatory framework is changed, with future compensation payments to consumers being funded by a levy on the £9 trillion of retail assets managed by the UK investment industry. This would replace the current compensation model which is funded by a combination of PII cover and the Financial Services Compensation Scheme (FSCS).
Keith Richards, chief executive of the PFS, said: “We are encouraging financial advisers to tell MPs and other policymakers about what is happening in their community in their own words and giving them the option of referencing the Personal Finance Society’s proposed solution as a starting point for debate in a clear and accurate way.”
Garry Heath, director general at the IFAA, believes that IFAs need to go further than simply writing to their MPs. He argues that the Treasury Select Committee (TSC) is the only parliamentary body with the power of regulatory oversight of the financial services industry. He wants IFAs to write to both the TSC Chairman Mel Stride and their MPs to demand a review of all regulation and its costs. “We need to push our issues higher up their agenda,” he said.
James Burgoyne, Director – Claims & Technical, Brunel Professions agrees that regulatory and insurance costs are a significant issue for IFAs. “Raising awareness of the issue with MPs and the TSC may help to prevent further burdens being placed on the advisory community in the future,” he said.
“In the meantime, IFAs should focus on adopting the highest possible standards of risk management and eliminating complaints in their businesses. This is the best way to demonstrate to PII insurers that their firms are well-managed, which in turn will help to ensure they can secure the most competitively-priced PII cover,” he added.
The PFS’s news release and template letter has been published on its website. The IFAA has also published its template letter on its website. Reports about the development have been published by FT Adviser, New Model Adviser and Professional Adviser.
Brunel secures competitive professional indemnity insurance cover for financial services professionals. To find out more visit the Brunel website or call Mark Sommariva on 0203 475 3275.