Former financial services secretary Lord Myners has called for a review into the minimum capital requirements for IFAs not holding client money.
The Labour peer, who held the ministerial role between 2008 and 2010, tabled a written question on the issue in the House of Lords this week.
He enquired whether the government will ask the FSA to undertake the review, "with a view to determining whether those requirements are proportionate to risk and whether they constitute an inhibition on the development of the independent advisory sector".
In reply, Lord Sassoon, the commercial secretary to the Treasury, said the FSA decides capital requirements for IFAs, independently of the government.
He added: "Requiring PIFs (personal investment firms) to hold more capital resources will enable them to provide better redress for consumers and limit the compensation due from the FSCS in the event that they are wound up.
"The FSA estimated that, as a result of the new rules, there will be a reduction in the administrative burden to the FSCS, reduced costs to the FSA and reduced compliance costs to PIFs."
In November 2009, the FSA confirmed PIFs, which includes IFA firms, will need to hold capital resources worth three months of their annual fixed expenditure, with a minimum of £20,000, by the end 2013.
Since November 2008
Share issue oversubscribed
PARTNER INSIGHT: For many advisers, outsourcing to a multi-manager or discretionary fund manager makes sense, allowing them to focus on the adviser-client relationship
Events, information and other services
An added tier of asset management can of course deliver additional benefits for certain investors, writes Graham Bentley - just be sure you can justify it to the regulator and, especially, the client