FSA plans requiring IFAs to hold capital of at least three months of their annual fixed expenditure risk the sustainability of the sector, warns the Association of Independent Financial Advisers (AIFA).
Responding to the regulator's decision to go ahead with its Expenditure Based Requirement (EBR) Prudential proposals, AIFA says the plans fail to meet the stated aim of providing ongoing support for consumers when a firm is wound up, but not burdening remaining firms. The plans call on all IFAs to hold a minimum £20,000 buffer by the end of 2013. Andrew Strange, director of policy at AIFA, says: "The current proposals will see the capital requirements for all firms increase. There is a clear risk that this may result in a less sustainable sector, running counter to FSA's original obj...
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