More than two in five advisers (42%) feel that open-ended liability is a significant issue when considering selling their business or acquiring another business, new research from the NMG IFA Census, commissioned by AIFA and Zurich, reveals today.
This latest research is being released as part of the AIFA and Zurich ‘Fair Liability 4 Advice' campaign which calls for the introduction of a long-stop for the financial advice profession.
Richard Howells, Zurich's Intermediary Sales Director, commented:
"Consumers need and deserve a robust financial services community. To do that and seek capital investment, firms must be able to quantify risk and exposure. At present this is simply not possible due to the open-ended nature of advice liability. This research demonstrates it is a major barrier to the growth of the profession.
"As an industry we must do more to address this issue and help firms to take steps to mitigate the risks they face. With the changing regulatory landscape it's important that we continue to support advisers as they have a vital role to play in helping consumers make the right long term choices for their financial future. We hope government and the regulator listen to the concerns of advisers and understand the damage this unresolved issue is doing to the potential growth of the profession and access to financial advice."
The campaign research also reveals that advisers are evenly split on whether it is better to include open-ended liability in buying a business (29%) or exclude it (32%) whilst over a third of advisers (39%) simply don't know how to best resolve the issue.
Chris Hannant, Policy Director at AIFA, said:
"The uncertainty caused by open-ended liabilities prevents advisory firms becoming tradable assets and hinders firms' ability to attract new sources of capital. No one wants to buy or invest in a business with open ended liabilities. Although the number of claims after 15 years is very small in number it is the unquantifiable impact that is proving a real barrier to investment."
AIFA and Zurich are encouraging advisers to support its campaign for the introduction of a long stop on advisers' liabilities.
The campaign also aims to research the impact on the ability of firms to attract long term investment; explore the options available for advisers and help them understand, limit and manage their long term liabilities.
For further information, to give your thoughts on the issue or to register your support please visit: www.aifa.net/fairliability.
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