Sir Bryan Carsberg, director general of fair trading, ruled that the introduction of the PIA would not restrict, distort or prevent competition to any great extent.
The OFT's report to Kenneth Clarke, Chancellor of the Exchequer, removes one of the last barriers to the PIA's recognition by the Securities and Investments Board. Although the PIA has come under sustained criticism from MPs and from numerous financial services companies, the Treasury and the SIB have both indicated that they are keen to see the new body established.
The final recognition of the PIA, expected in about three weeks, still awaits a ruling from the Friendly Societies Commission. The Commission has a statutory duty to satisfy itself that the PIA's rules are appropriate for friendly societies.
Although the OFT was satisfied about the overall impact of the PIA, Sir Bryan was concerned that three of its rules could prove to be anti-competitive.
These were: the PIA's capital adequacy requirement for members to have net assets of at least pounds 10,000; the controls that prevent the employment of salespeople who owe more than pounds 1,000 to life insurance companies; and rules requiring varying levels of professional indemnity insurance.
The OFT said the rules had 'anti-competitive potential' but were not presently a problem. Sir Bryan will keep them under review.
He also drew attention to the rising costs of self-regulation, and urged that the SIB and the PIA should keep costs under review. It has cost about pounds 6m to set up the PIA and it will cost about pounds 30m a year to run.
The PIA is to take over the responsibilities of Lautro and Fimbra, the regulator of independent financial advisers. It is intended to produce a marked improvement in standards of investor protection.Reuse content