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What do you expect to be the biggest problems the FSA will find in its visits to newly regulated firms?

The grandfathering of existing advisers is an issue in its own right. The FSA will want to know from the compliance department what made it believe that the adviser grandfathered in was compliant, and if it does not agree the checks were sufficient, action will be required.

Simply working through MCOB and ICOB to interpret what&#39s required is onerous in itself. Compliance departments will have to create a continuous professional development plan for each adviser and ensure that the plan is appropriate for the adviser, that the CPD activity is of a sufficiently high standard and that it is relevant. This is a challenge for those who have not been used to working in a structured way, particularly sole traders.

Analysis of key performance indicators is an important area. Retail mediation activity reports will have to be completed. A statement of demands and needs must also be provided for each sale. Advisers with no prior knowledge of what&#39s required could fall short. IFAs have been subject to 15 years of regulation, have been producing suitability letters since 1995 and are still frequently criticised for their content. So the odds on mortgage advisers who haven&#39t done it before getting it right the first time are slim. And the risks these sales create once the Ombudsman gets stuck into complaints is significant. Many decisions will hang on the content of suitability letters.

Further complications could surround the confusion between advised and non-advised sales and how these affect cancellation rights. In companies active in non-advised sales, putting the necessary procedures in place to ensure non-authorised staff are not giving advice will be important.

All in all, a not insignificant number of ways you could slip up and find yourself with a sanction.

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