Aifa strategic review must come up with the goods
Many years ago, as a schoolboy barely out of short trousers, I went to see a band called Status Quo at the Bournemouth Pavilion. I know it’s not a cool thing to admit to nowadays but they were pretty good.
During a very brief phase before the excesses of punk, reggae, ska and eventually Northern Soul claimed me forever, I even learned how to play the simple but catchy opening chords to Caroline on a mate’s guitar.
As a result, I have always had a soft spot for Status Quo. There is a delicious irony in the notion of a band that has made the Latin term its own forever repeating variants of the three-chord riff that so excited me as a teenager.
My problem is that, amusing though the phrase “status quo” is in the context of post-modern musical irony, it sits less well when discussing the financial services industry. So when I hear that Aifa is conducting yet another “root and branch” review of the way it is structured, my heart sinks.
In an interview given to Money Marketing editor Paul McMillan the other week, Aifa chairman Lord Deben and new director general Stephen Gay were at pains to emphasise that Aifa’s three month strategic review meant “retaining the status quo is not an option”.
According to Lord Deben: “What we wanted was a proper review involving a great deal of individual and group consultation and seeing the best ways in which we can provide a better service to members, what is that going to cost and how we can best interact within the new structures.”
Ah, yes, a review that involves lots of “individual and group consultation” but in which the status quo is not an option - when have I heard those phrases before?
How about 2005, when Aifa consulted its members over whether to admit multi-ties and “whole-of-market commission-paid” advisers (as they were once called) into its membership. That option was turned down back then.
Or what about January 2007, when we were told Aifa’s retail distribution review working group would not be trying to come up with “yesterday’s answers to yesterday’s questions” and genuinely wanted “new thinking” on this issue.
Meanwhile, the then Aifa director general Chris Cummings was busy telling anyone who would listen “there has never been a time when we have listened more to members”, presumably with the exception of this present three-month review, when the “listening” will be even more acute.
A few weeks later, Chris was busy telling readers of Money Marketing all the usual stuff about “fresh thinking, honest assessment and radical debate” while also stressing “this is no time to trot out glib statements”.
Then there was July 2007, when Aifa unveiled its “biggest-ever” survey of advisers to help it inform its RDR response. We were told the survey would involve consumer research, as well as “data about the contribution the advice community makes to the economy”.
Among the topics to be covered were commission and customer-agreed remuneration, adviser segmentation, profess- ional status, indepen- dence and primary advice.
What was the outcome of all these incredibly detailed consultations with members, root and branch reviews, radical debates, fresh thoughts and listening to members?
Well, two years later, Chris Cummings called for a review of the Financial Ombudsman Service, which he wanted to become “a smaller, cheaper operation, sharing resources with other parts of the regulatory structure”.
Among the changes demanded by Aifa to the way the FOS operated back then were the introduction of a long stop for IFAs, a “no loss, no fee” system so IFAs are not charged if they are cleared of any wrongdoing by the FSA, claim management firms to be included in the annual levy and “for the FOS to be subject to the rule of law and bound by legal precedent”.
Strangely enough, these demands were almost identical to ones raised by the IFA Defence Union in February 2007.
Last year, we had Advice Horizons, which implied that while independent financial advice was “the gold standard” for IFAs to aspire to but restricted advice did not lower standards in terms of professionalism and quality of service.
It was hard then - and even harder today, in the light of the comments from Lord Deben and Stephen Gay - to ignore this as part of a softening-up of Aifa members, preparing them for the likelihood that this so-called “root and branch” review will recommend allowing “restricted advisers” into their ranks.
That, ultimately, is a matter for Aifa. My problem lies not with this tactical concession, generated as much by the demands of the trade body’s principal financial sponsors as it is by a desire to help those who abandon genuine independence.
The worry is that unless this review really does come up with the goods, it will generate yet more cynicism among both Aifa members and those whose main form of enjoyment lies in baiting the trade body for its inactivity.
There are radical answers to the problems IFAs are likely to face in the years ahead. Somehow, I’m not sure Aifa will find them. As with Status Quo, I expect the same three-chord riff in a few months time.
Nic Cicutti can be contacted at email@example.com