New fears about the ability of accountants to offer investment advice surfaced this week after the Financial Services and Markets Bill failed to spell out which accountants would be covered by the new regulatory regime.
A consultation paper, published in February, proposed to exempt accountants from regulation by the Financial Services Authority unless they provided advice about specific products.
But the Bill, issued last week, contained no such provision, leaving a final decision on which groups fall under the FSA’s authority to the Treasury.
Small practitioners fear a massive hike in regulatory costs if they have to pay for supervision by both the FSA and their professional bodies.
The Treasury said this week that the issue had been referred to the Joint Committee on Financial Services and Markets for a decision.
A spokesman said the committee was still debating what constituted ‘specific advice’. He said the FSA might issue a further consultation document to gauge the burden regulation would have on businesses, and this could mean firms that had expected to remain outside the FSA’s remit will fall under its powers. A final decision should be made at the end of the year.
Peter Mitchell, chairman of the Small Practitioners’ Association, said the new uncertainty was ‘regrettable’. Small practitioners were usually best placed to give non-specific advice to clients about their financial affairs, he said.
‘The cost of regulation will drive clients into the arms of people who are not as well qualified and whose track history has been very poor.’
The Bill will also give the FSA new rights to intervene in order to speed up personal and corporate insolvency. Its new powers will include the right to attend creditors’ meetings during bankruptcy and to be heard in court in proceedings relating to voluntary liquidation.
The Bill will also allow the voluntary winding up of long-term insurance businesses for the first time.
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