Personal Finance Society (PFS) chief executive Keith Richards has said a relaxation on capital adequacy (cap ad) rules amid the coronavirus outbreak could leave firms more vulnerable to unforeseen financial impact in the future.
In a column for Professional Adviser published this morning (18 March), Smith & Pinching Chartered financial planner and director Carl Lamb said the regulator could help the sector amid the Covid-19 pandemic in "two critical ways".
He suggested the Financial Conduct Authority (FCA) should suspend its cap ad rules for the time being so that those firms who need to dip into their reserves can do so without falling foul of the rules when they submit their next Gabriel return.
He also said there should be a commitment to no further Financial Services Compensation Scheme (FSCS) levies during the next six months to enable advisers to more accurately plan finances without the prospect of another levy dropping onto us at short notice.
However, Richards (pictured) disagreed with Lamb's pronosis, saying: "Relaxing Cap-ad rules would potentially leave firms, staff and clients more vulnerable to unforeseen financial impact and instead firms should be considering how to deal with short-term financial challenges and shocks which could otherwise be catastrophic.
"We continue to engage with the FCA regarding the challenges being faced by advisers and their clients and it is clear that they are in listening mode and I'm confident that pragmatism and flexibility under the unprecedented circumstances will be applied."
£33bn 'war chest'
On Tuesday (17 March), Chancellor Rishi Sunak unveiled a package of government-backed and guaranteed loans to support businesses through the coronavirus outbreak. Speaking at the daily press conference at Downing Street, Sunak said the pandemic was a public health emergency but also an "economic emergency".
Government-backed loans amounting to £330bn will be made available from Monday and an additional £20bn in grants and business rate relief was also announced. This would bring the total coronavirus ‘war chest' to £350bn.
Richards said it was important to understand what the £330bn loan means for the personal finance profession: "The Personal Finance Society is in regulator talks with the Financial Conduct Authority and will seek clarity on the support available to financial advice businesses to ease the pressure already being experienced by firms across the UK during this period."
He said the PFS was "committed to supporting" its members, their businesses and the public they serve, adding: "We will share any updates we receive from government and the regulator that can assist our members to meet regulatory requirements and deliver the service agreed with clients while trying to delay the spread of the coronavirus."
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