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Thursday 3 February 2011

FEIFA counsels advisers on EU passporting but warns of "major issues"

FEIFA CEO Paul Stanfield has warned advisers thinking of passporting their business back into the UK post RDR to carefully consider all the implications before taking any action.

Stanfield, who launched the Federation of European Independent Financial Advisers in August last year, was in part responding to a recent suggestion by the Association of Independent Financial Advisers that IFAs should not rule out passporting back into the UK post the RDR. He said while FEIFA had been receiving some enquiries about passporting previously this had increased owing to these comments.

He warned, while in some cases this cause of action could be beneficial to an IFA firm, there were a number of serious and far reaching considerations which need to be taken into account before such a decision is made. Stanfield said these can be broken down into a number of “headings” which include: regulatory and legislative, costs and savings and competitive considerations.

Foremost of Stanfield’s regulatory and legislative considerations was the need for the adviser to establish under which rules it would passport, either Freedom of Services or Freedom of Establishment, as this will dictate where an adviser can be based, live and the types of employment regulations under which the firm is governed.

Stanfield also warned on the cost implications of moving abroad as, while the IFA would no longer need to pay any FSCS levy, if an office is required in another EU state this will generate costs and possibly greater liabilities in areas such as staff benefits and entitlements.

However, one of the biggest considerations highlighted by Stanfield was the potential commercial implications of such a move. Stanfield said: “In all of this, an IFA evidently needs to ensure that the location of their regulatory status does not put them at a commercial disadvantage to direct competitors.

“This involves an appraisal of both the “image” of their regulatory status and proposed new jurisdiction, as well as assessing the perception of no FOS or FSCS in the eyes of clients. Of course, similar, if not even greater client protection may be available via regulation in another EU State, but potential language barriers may be seen very negatively by some clients.”

On a positive note, Stanfield said a move to another EU jurisdiction could open new business avenues for the IFA not least of all cross border pension advice such as QROPS.

http://www.international-adviser.com/article/feifa-counsels-advisers-on-eu-passporting-but-warns-of-major-issues

http://www.qrops-advisers.com

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