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APFA welcomes Financial Advice Market Review


The Association of Professional Financial Advisers (APFA) has provided an initial response to the joint HM Treasury and FCA Review into the Financial Advice Market (FAMR).

APFA welcomes the recognition that part of the problem includes regulatory costs imposed on financial advisers and the impact of the regulatory framework, the Financial Services Ombudsman (FOS) and the Financial Services Compensation Scheme (FSCS). 
APFA’s paper focuses on ways to reduce the cost of giving advice: first by addressing the problem of liabilities faced by financial advice firms and the cost this involves and secondly by reducing the cost of regulation.
Chris Hannant (pictured), Director General of APFA, says: ‘I am pleased to see that the points we have been making are been listened to as the options being considered include a longstop and reducing the cost of providing advice. 
“A driving factor for the focus on ever higher net worth individuals has been the rising cost of being in the advice business, so part of the solution must be to reduce the cost of giving advice. The growth of a compensation culture has led to a considerable impact on advice firms with the cumulative effect of FOS compensation, FSCS levies and professional indemnity insurance. These costs not only are passed on to consumers, but also prevent firms from investing in greater capacity, expanding and innovating. A balanced and comprehensive safety net needs to be designed involving the introduction of a longstop and reform of the FOS and FSCS. 
“We welcome this Review. It is an opportunity to put right some of the problems with the regulatory framework that will allow advisers to fulfil the need for financial advice and for the profession to grow.”

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