The number of IFAs in FSA enforcement action is rising because of "mad and manic" regulation which goes further than that of any other G20 country, says a leading City lawyer.
Simon Morris, partner at London law firm CMS Cameron McKenna, says an increase in the number of enforcement cases he handles relates more to the FSA's increasingly "zero tolerance policy" to the advisory sector than poor performance.
The FSA demands "immensely high and unrealistic standards" from UK advisers, and no other country in the G20 group of major economies has a comparable system, he says.
Fund managers and IFAs are increasingly falling foul of FSA investigations as they struggle to comply with tightened regulations, Morris says.
"What constitutes a suitable sale is whatever looks good to an FSA inspector at the time, it is as subjective as that," he says.
According to Morris, the FSA would say a compliant 'sale' comes after a two to three hour interview with the client, a "philosophical discussion" with the client about their attitude to risk and full disclosure of products considered and discarded as well as those chosen.
"Advisers must gather all the soft facts around personality as well as the hard facts. If they don't, or they don't keep detailed information on this, the FSA will say the sale was unsuitable."
He is warning advisers a client suitability letter filled with stock phrases will not be enough.
The FSA's regime will eventually push advice out of reach of the modest consumer paying a premium of £30 a month, he says.
Morris adds: "If you take 100 investors, the FSA would prefer the one rich person received perfect advice and the rest none at all, except maybe five or six, who would receive suitable advice."
His warning comes after financial services lawyer Alasdair Sampson also lambasted the FSA in this week's Professional Adviser for police-style interrogations of advisers at Canary Wharf when they are under investigation.
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