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Categories:Advisers,Other

Nic Cicutti: Aifa turning into modern variant of LIA

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A few weeks ago, when writing a column about Neil Liversidge and his “open letter debate” with Radio 4’s Money Box presenter Paul Lewis, I praised him for the trenchancy with which he defends the IFA corner.

Neil, I wrote, “is one of the few Aifa representatives with any credibility among rank-and-file advisers. The danger is that he might end up as a tame John Prescott, playing warm-up man to Aifa’s Tony Blair. Thankfully, there is no evidence of that, so far.”

After writing that column, a few readers contacted me to say there was no likelihood of Liversidge becoming like Prescott. One email, which I kept, said: “To compare Neil with ’Two Jags’, who sucked up to Blair while grabbing almost every privilege going, including a Lordship, is completely wrong. He will never sell out for anyone or anything.”

I realised then that my description of a potential comparison between Neil and Prescott had not been expressed subtly enough.

The Prescott I was referring to was not the vain man who lived in a grace-and-favour house rented to him by the RMT union at a fifth of its market value while enjoying a separate pad at Admiralty House and a weekend mansion at Dorneywood, where he was famously pictured playing croquet.

No, it was the Prescott of the mid-1990s, who stood for leader of the Labour party, was instead elected as deputy to Tony Blair and went on immediately to prove his worth by backing all of Blair’s “reforms”.

In this, he acted effectively as a cover for Blair with the trade unions, of which he had been a staunch member all his life. It was Prescott’s credibility as a former militant shop steward that allowed Blair a much easier ride with the brothers and sisters.

And it was this Prescott, who at that time had no dream of privilege in mind when he backed Blair down the line, whom I felt Neil Liversidge was in danger of becoming.

Barely six weeks later, I find myself wondering if prophecy is beginning to come through sooner than I thought.

Last week, Money Marketing put Neil and Gill Cardy together, to debate the necessity or otherwise of a new trade body to defend the interests of IFAs. Let’s leave Gill’s argument to one side for a minute - it is Neil’s that interests me.

What he says, and it is a mantra that has emanated almost word for word from the bosom of Austin Friars House for some months, is that just because the FSA has “moved the goalposts” by insisting on a redefinition of what constitutes “independence” does not mean that the trade body itself should.

For this reason, Aifa’s decision to recruit members who will belong to the “restricted” category of adviser on January 1, 2013 is entirely appropriate.
There are two problems with this approach. The first point to note is that Aifa itself is now moving the goalposts, not just the FSA.

Whereas in the past, it would never have occurred to a trade body for independent advisers to recruit all and sundry to its ranks, regardless of their status, Aifa will clearly be able to do so in just over a year’s time.

That is not just about allowing a few members who still want to earn a crust by being paid commission to stay within the organisation but opening your doors to anyone who wants to join.

Ironically, in doing so, Aifa is turning itself into a modern variant of the LIA, which saw no problem with allowing anyone to be a member, something the old Nfifa was bitterly opposed to many years ago

The second issue worth noting is that any representational body reflects a reality on the ground. Nfifa was set up because the Financial Services Act of 1986 created a body of advisers whose role was clearly defined and whose representational needs were seen as different from other sections in the financial services industry.

If, therefore, an IFA is being newly defined by the FSA by reference to remuneration, among other aspects, then surely the central issue is that of assessing whether the representational needs of that new independent sector are sufficiently different from other salespeople to warrant a separate organisation. If the verdict is yes, then Aifa should stick to its knitting.

Of course, that is not why Aifa is moving its own goalposts is it? I recently read a long anguished interview with Aifa director general Stephen Gay in which he bemoaned the fact that, compared with organisations such as the ABI or IMA, his own trade body’s staffing levels were minuscule and insufficient to the task.

The message, therefore, appears to be - if the apparatus is not large enough for Gay and the rest of Aifa council or is in the remotest danger of shrinking in the light of the new FSA requirements to be introduced after 2012, open the doors to anyone who wants to join - the extra money will come in handy.

And if some members question how genuine IFAs might end up being completely marginalised by an organisation that once used to represent their needs exclusively, wheel out a well respected arch-IFA to tell them there’s nothing to fear.

You tell me that’s not like John Prescott.

Nic Cicutti can be contacted at nic@inspiredmoney.co.uk

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Readers' comments (18)

  • The answer to the question Where have the goalposts gone? is simple. The FSA confiscated them several years ago. Merely moving them all the time just wasn't good enough.

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  • I guess this was meant to provoke me to the kind of fury that you love to generate from other IFAs on a regular basis. In reality I fell about laughing. Here's the reality: The way it looks at the moment we might be defined as 'restricted' if we don't offer our clients esoteric risky unregulated products and maybe even overseas products for which they have no appetite whatsoever. From the FSA's other recent emanations there are also various other reasons they might find to categorise us as restricted. Still nothing seems to have solidified however, though it does look as though restricted advisers will also be banned from taking commission as will be independents. The only thing that does appear reasonably certain is that the FSA wants as few as possible to bear the 'independent' tag. (Probably nobody if the FSA suddenly fell ill with a dose of honesty, or am I being too cynical?) On that basis we can let the FSA define our constituency and end up like the wee wee frees who split from the wee frees up in Scotland when Lord Mackay had his fall-out, or we can be pragmatic and practical. Guess which I'm going for? I suppose we could take the militant line and exclude ourselves out of existence but at the end of the day it's what you achieve that counts.

    Going back to the Prescott analogy, I have long found it hilariously ironic that, given the generally right-wing complexion of the adviser community, its internal politics so much ape those of the far left. Seldom does a week pass now without a denunciation of AIFA by a would-be competitor. What a waste. At a time when a popular front against over-regulation was never more needed, there are those in the IFA industry who would rather shoot at their own friends and justify it by casting them as traitors. When the FSA’s definition of ‘Independent’ finally crystallises – and it’s still not certain where the line will be drawn – many who consider themselves independent and who have no plans to change their business model may well find themselves on the ‘restricted’ side of the border. I may even be amongst them; though I know of nobody in the industry more firmly in the IFA camp. Will all us ‘old Bolsheviks’ then be purged by those we formerly thought our comrades?

    As a historian I cannot but help recall how the Stalinists and Trotskyites spent as much time fighting each other in Spain as they spent fighting Franco’s fascists. Here in the UK of course, whilst the left never got around to actually killing each other, they were never short of vitriol with which to denounce each other. The fact is though that, however much the defunct Communist Party, the Socialist Workers, Workers Revolution and the rest reviled the Labour Party, none of them created the NHS. The old Marxist belief that ‘soft left’ social democratic parties would be supplanted from the left, as the workers realised they had been betrayed, also finds its echo in the polemics of AIFA’s detractors. Do they really think destroying AIFA can bring a more effective force into being?

    If anyone wants to know what AIFA is really about then all you need do is talk to us. You can talk to AIFA’s officers or you’re welcome to phone me; my contact details are on the FSA website. AIFA is not a cliquey secret-squirrel club but a practical and open organisation doing its best with the meagre resources it has. It is open to all shades of opinion in the IFA sector and it needs all of you to play an active and constructive part by adding your views and your intellect. To that end, to Comrades Cardy, Lakey and the rest, I say “take a break, read some George Orwell, and when you’ve learned where the path of internecine strife leads, come back and join AIFA. We can work together, the door is open and you will be very welcome.”

    To Nic on the other hand I say ‘Congratulations on running the classic set-up and-knock-down play’. You executed it brilliantly. ‘Last week Neil’s a hero, this week Neil’s a traitor’. Yeah, right. But because we’ve seen it all before it impressed nobody. Have a nice day.

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  • Neil Liversidge,
    The way you spoke to me this morning, when I rang to ask why in November 2009 AIFA promised to pursue a judicial review if the FSA did not listen to to them regarding level 4 qualifications (MM November 2009) was a disgrace. First you tell me that AIFA would not have said that , then you went on to shout at me and abuse me because I am not a member and im waisting your time, finally telling me to "get my $@@%ing money out my pocket and pay my dues" before hanging up on me. Real professional that was Mr Liversidge. To say that my conversation was like one I may have with our local yob is being unkind to the local yob. No wonder AIFA is almost dead on its feet and members are leaving in droves. I was open to join this morning had I had a decent conversationwith the man, now never ever!!
    Nic Likening AIFA to the LIA is extreamly disrespecful lto the LIA.

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  • Richard, your version of events above is as warped as your logic when you phoned me. I am starting to see that the regulator has a point about the ability of some advisers. You think that AIFA should run a judicial review when it has no money to fund one. How financially responsible would that be? I would not like to be a client of yours if you advise them to take on debt and risk so recklessly and with such little consideration as to their wherewithal and the likely results. This morning you saw fit to phone me and rant on about a promise AIFA supposedly made two years ago before I joined the Council. Apparently you have a problem passing level 4 and you want AIFA to spend its money on a legal challenge. When I asked if you were an AIFA member you admitted - after being asked several times - that you weren't. You said you would not pay a penny to AIFA calling it useless and making disparaging and insulting references to the individuals running it. However you still felt entitled to take up my time with your unsolicited call to rant at length, hence my termination of the 'discussion'. I was elected to represent small firms, which I do, and I think my colleagues on the AIFA Council would admit that I do so forcefully, albeit I am both a realist and a pragmatist. You told me that you are a member of Lighthouse. Malcolm Streatfield represents Lighthouse and the networks on the AIFA Council and did so long before I was elected. If you have a problem therefore, with what AIFA was doing two years ago, then it would seem to me that it is he you should be ringing. For the record I treat polite and reasonable callers in the same manner, but pontificating ranters get short shrift. I am not sitting in a coconut shy for anyone to throw rocks at, and anyone who tries had better duck quick when I throw them back.

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  • Did I not read that AIFA made a loss of some £200,000? And now one of its directors wants to lecture someone else about "financial responsibility"

    Ironic or what?

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  • Should we not be debating the fundamental issue here which is why the regulator sees fit to dictate its own definition of "Independent"?

    Or how it can stop specialists in say pensions, protection or investments who are WOMBLIES (FSA speak for whole of market) in a particular area from calling themsleves "Independent".

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  • @ Nick Bamford - Wow! That's about as cheap a shot as cheap gets. I didn't expect that from such a 'giant' of the industry, but one lives and learns. For my part I joined the Council a year ago and I happily accept collective responsibility for what is within my control and for what I have been able to do personally in the last year. otherwise I don't intend discoursing on here re' AIFA's finances. I can say though that my conscience is completely clear.

    @ NIc Cicutti - Another thought occurs to me Nic. Shortly after my election to AIFA in 2010 you wrote a piece which prompted me to invite you to meet with me and find out the reality of what I’m about. I suggested it a couple of times as I recall, but you found excuses not to bother. I have it on good authority also, Nic, that you have been invited along to AIFA HQ, but you haven’t bothered to take up that invite either.

    It strikes me as a lazy approach to journalism to base articles on ill informed assumptions. At least if you did come along to talk to us you could still write up your warped version of the truth and back it up by claiming to have at least done SOME research.

    I have nothing to hide and neither has AIFA. We’re doing our job the best we can with the resources we have, including those resources we devote to research. How’s your research these days Nic?

    And yours, Nick?

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  • Ill keep this short.
    A. as for my clients 28 years should speak for itself.
    B. As for exams , mine is in about 3 weeks having completed my study.
    C. I have listend to our conversation again and in fact my version isnt "warped" at all its very accurate.
    D. I didnt ask you to pursue a judicial review at all, in fact Im surprised you can remember anything I said because all you did was talk over me, I asked why AIFA had not kept its promise of two years ago to pursue one. It wasnt a personal attack and whether or not you were on the council at that time I thought you could have given me the answer.
    I WAS considering joining,however I now consider the matter closed as is my wallet as far as AIFA membership is concearned

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  • So let's get this straight Richard. You're represnted by your networks boss but you didn't phone him. You were supposedly 'thinking of joining' but you're not actually an AIFA member. (How many times have we heard that?) You did phone somebody who represents quite another AIFA constituency - small firms - when he was doing his day job, and you gave him a hard time about something AIFA did before he was elected. In the same circumstances I'd have told you where to go. I think you should concentrate on passing your exams.

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  • @Neil Liversidge

    I am not a giant I am 6ft 2inches

    If you don't want "cheap shots" then don't line them up so easily

    Still I guess having a sense of humour and being an AIFA Director don't have to be mutually exclusive unless you choose to make them so

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