Nic Cicutti: Aifa turning into modern variant of LIA
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 email@example.com