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The Association of IFAs is urging the FSA to give IFAs more time and offer more clarity over the move to guidance-based regulation.

The call came in Aifa's response to the FSA's consultation paper - CP 07/23, Organisational Systems and Controls - Extending the Common Platform, which looks at extending regulatory controls to firms that are not currently subject to the Markets in Financial Instruments Directive or the Capital Requirements Directive. These firms include mortgage, insurance and investment intermediaries.

Aifa believes the FSA's proposal to extend the common platform in October would not allow firms enough of a transition period, particularly in light of the current market turmoil, and that more rigorous analysis of the impact of extending MiFID is needed. Aifa suggests the proposals should not be implemented until October 2009.

In its response, Aifa also said the FSA needs to clarify how the move away from rules-based regulation to guidance will affect firms. It claimed it is the regulator's duty to sign post where changes are proposed and what impact they will have on firms. However, Aifa's response states: "We are deeply concerned that CP 07/23 fails this test. The title of the CP fails to convey its meaning, the text’s notation style is dense, and more worryingly, the impact on firms is unclear."

Aifa has also expressed concern that the FSA's greater use of guidance over rules is pushing more firms to outsource their compliance, but the quality of compliance consultancies varies greatly. Aifa suggests the FSA should work with the Compliance Institute to produce a list of approved firms or alternatively publish the FSA's own list of the organisations it regularly commissions to undertake skilled persons reports.

Chris Cummings, director general of Aifa, said: "Aifa fully supports the FSA's move toward a more principles-based regulatory regime. However, the drive for simplicity can result in significant unintended consequences. The FSA should improve its communication with intermediary firms about the role and regulatory status of the different types of guidance. Firms that have enjoyed the certainty of rules in the past, and who now find those rules expressed as guidance, will also need a period of transition.”

Dennis Hewitt, chairman of the conference committee for the Compliance Institute, said: "We are developing a study course with Warwick University which will result in a qualification in compliance and hope to have an associate level qualification - broadly equivalent to an NVQ by around the third quarter. This means compliance staff will be able to add this to their competence and firms employing compliance staff will be able to look out for this standard.”

Tony Byrne, managing director of Milton Keynes-based IFA Byrne Williams, said: "In theory, the move towards guidance over rules is a positive move but I think in reality it is doubtful whether it will improve efficiency or result in improved service for customers."