FSA capital adequacy proposals may see IFAs leaving the industry warns BDO

Paul Gough, Head of Retail Financial Services, at BDO comments on the capital adequacy proposals outlined by the FSA:

“Whilst the FSA's proposals to simplify and clarify the existing capital resources and requirements are welcome, the FSA may have underestimated the financial effect on smaller firms.

“A number of small IFAs, who have historically only been required to have capital resources of £10,000, will now be subject to the expenditure based requirement.  This could well be significantly greater than the new proposed £20,000 minimum level,” he continues.

“They could also face higher funding requirements if they wish to leave the industry due to the "Leaving Resources Behind" proposals,” points out Gough.

“This combined with other changes proposed in the Retail Distribution Review (including the FSA's refusal to put a limitation on the time period for claims and additional costs of funding the Financial Standards Board) is likely to lead to large numbers of small IFAs either joining larger organisations or leaving the industry," concludes Gough.
 
ENDS

For more information, please email Dee Crooks at BDO, or telephone: 020 7893 2761 / 07815 172 051

Notes to editors:

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