Biba is looking at developing a solution for brokers to address the potential crisis over goodwill.
The move follows a warning in March from the FSA that nearly 600 brokers must restructure their businesses by early next year or be in breach of the rules.
Under FSA rules, goodwill cannot be included in brokers’ solvency calculations from 14 January 2008.
But experts warned that many of these brokers will not meet the deadline and risk being shut down by the regulator.
Biba regulation and compliance manager Steve White said: “We are looking at the potential for a solution that may involve the broker setting up a holding company [for the goodwill]. A one-size-fits-all approach is not suitable, but a number of options are available.”
The regulator had identified the 600 brokers with potential goodwill issues from their retail mediation activities returns (RMAR).
Kieran Marsh, of Marsh Corporate Consulting, said: “A lot of brokers are saying that date [14 January 2008] is a long way away. Brokers need to act now, yet many of the 600 brokers have not taken steps to address the issue.
“This issue will have a direct impact on major consolidators but they have direct supervision and are big enough to set up a holding company to deal with the goodwill issues.”
The FSA’s approach to goodwill conflicts with current accounting standards which see it as an asset.
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