We have dealt with a number of IFA sales recently - find out why.

The pace of new regulations being announced for IFAs continues despite the economy and the drop in stock markets. IFA firms will have to dig deep into their pockets to integrate and apply the additional regulations and to survive in an ever increasingly restrictive market.  The stakes remain high that more IFAs will be considering sell up.

We look at changes on the horizon for IFAs:

• Outcomes-based objectives
• Final salary pension scheme (Defined Benefit transfer)
• Increased compliance
• Agents and brokers fees

Outcomes-based objectives

It is anticipated that for the remainder of 2020 and beyond, the UK will see a number of new rules designed to deliver better value for money with IFAs being required to demonstrate that good customer outcomes are core to everything they do.

Regulators are adopting a more outcomes-based approach to the conduct of regulation and supervision.  The outcomes will be based on design, sale and distribution of financial services products and for customers with non-typical needs including those deemed to be vulnerable.

IFA fees under scrutiny

Firms need to ensure that excessive fees are not charged and that they can demonstrate fairness between the charges paid by retail and institutional investors and will be increasingly asked to justify fairness of their pricing decisions.  Investment managers will also be required to publish their first assessments of the value their funds deliver.

Final salary pension scheme

Recently, the FCA took measures to address weaknesses in final salary pension scheme transfers (referred to as a defined benefit (DB) transfer).

As most IFAs receive payment by way of contingency charging, the FCA believes that the impact for IFAs for loss of revenue in DB transfer advice could be between £360m to £445m a year due to fewer consumers paying for unsuitable advice.  This equates to each IFA firm losing in excess of £300,000 a year.

Each IFA firm can also expect to pay a one-off cost of approximately £35,300 to change its processes and upgrade its systems to fall in line with the FCA’s new rules.

Gannons has a team of experienced solicitors who specialise in selling IFA businesses.  We are always on hand to discuss any queries or concerns that arise and work with you and your agent throughout the transaction process.