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If you go to your MP and tell them that the QCF level four qualifications you are required to obtain by 2012 are too onerous, do not expect too much sympathy.
Lobbying MPs is an exercise in futility
It certainly promises to be an interesting year, with the final elements of the seemingly endless discussions over the retail distribution review finally slotting into place over the coming months.
Judging by the many comments I have read in Money Marketing and on websites that feature financial advisers’ comments, the overwhelming body of IFA opinion seems to be set against the RDR, at least publicly.
Shortly before Christmas, while on a visit to London, I took the opportunity of meeting a few IFAs whom I respect, even if I do not necessarily share their views. One, whom I had always thought of as opinionated but not remotely an activist, had gone so far as to lobby his MP about key aspects of the review, which he regards as highly dangerous to the future of independent financial advice.
His hope is that Conservative MPs will halt or seriously amend the RDR process if and when they win the general election.
Unfortunately, he told me, his own MP - a Tory - appeared to be highly ignorant about the RDR and what it entailed. Moreover, this particular MP told his constituent that when push came to shove, his “instinct” was to back the FSA because advisers were “renowned” for misselling financial products to clients.
The IFA then told his MP he was a disgrace to his party and he would never get his vote. Not a successful lobbying exercise, methinks.
Perhaps this helps explain why Aifa was pushed into warning IFAs last year that ill-conceived lobbying of MPs could have a negative effect in terms of achieving what they wanted.
The sad fact is that Aifa - and IFAs it has tried to arm with lobbying arguments - are unlikely to succeed. Parliament is highly febrile and it will be almost impossible, as we draw closer and closer to the election, to persuade anyone to listen to any point of view, sensible or otherwise.
Moreover, while many Tories may hate the FSA for all sorts of reasons, they almost certainly do not do so in this particular context. Tighter regulation of the financial services industry is a vote-winner, no matter what political party you belong to.
I have some sympathy with IFAs. Lobbying can be a useless exercise.
One of the problems, it seems to me, is not about the basic notion of lobbying as such but what it is that you tell your MP. Here, it strikes me that IFAs could be on a hiding to nothing in some areas.
For example, if you go to your Parliamentary representative and tell them that the proposed QCF level four qualifications you are required to obtain by 2012 are too onerous, do not expect much sympathy.
Similarly, trying to compare yourself favourably against banks in order to press the point that regulation of your activities need not be quite so onerous is not a tactic that is likely to work well.
Not that I can lay serious claim to being a successful lobbyist. Once upon a time, back in the days when I used to work as a nurse, our trade union asked its members to lobby their MPs as part of a campaign against low pay in the NHS.
Responding to our union’s request, about 20 of us toddled off to see an MP at his surgery meeting one Saturday morning, waving our pay slips.
The “lobby” degenerated somewhat and our little group started booing and shouting at our Parliamentary representative. Needless to say, the MP never really did sign up to our campaign against low pay.
My guess is that attempts to persuade MPs to get rid of some of the RDR’s worst aspects will meet with a similar fate.
Nic Cicutti can be contacted at nic@inspired money.co.uk
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Readers' comments (15)
Anonymous | 7 Jan 2010 1:56 pm
Lets be realistic our MP's are more interested in lining their pockets with tax free expenses than understand how the RDR will affect advice in this country
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Evan Owen | 7 Jan 2010 2:02 pm
This is what you get when people need a populist vote in order to reserve or retain their seat on the gravy train.
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Michael H | 7 Jan 2010 2:10 pm
I agree with Nic :
My view is that no IFA can claim superiority to the Banks (or anyone else) whilst just holding the equivalent of a couple of GCSEs as qualifications.
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John Blackmore | 7 Jan 2010 2:32 pm
Nonetheless the attempt should still be made.
QCF level 4 is not demanding enough for proper complex Independent Financial Advice and at the same time manages to be too demanding and unnecessary for the 95% who sell products for a living. Only an organization as incompetent and as out of touch as the FSA could have reached the conclusion that QCF level 4 was at all appropriate.
I have no problem with those who disagree with me but I'm surprised that the suggestion is being made that advisers should not exercise their democratic rights.
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Blair Cann | 7 Jan 2010 4:49 pm
My experience is somewhat different.
I involved my MP some time back specifically about the effect of the level 4 qualification benchmark on IFAs of a certain age. I also explained that as I already held the qualification (and I am now a cfp) I was not affected but my concerns were for IFAs who were affected, and indeed the industry as a result, if it lost those IFAs.
Peter Lilley MP duly acknowledged and referred the matter to the FSA and he has been extremely helpful in subsequent correspondence.As far as I am aware a large number of other IFAs have done much the same and we currently have a situation where alternatives to additional exams are being mooted.Is it not possible that lobbying of MPs has played a part in this development?
Incidentally, there seems to be an assumption in this general area that the QCA (or whatever they are now called) assesses the qualifications itself and then awards the level 3,4 etc . Unless practice has changed it does not.I spoke to the QCA a few years back about a particular qualification and asked if its assessment was in the public domain and if so could I get a copy of it. I was told that no such assessment existed and the levels attributed to all qualifications were determined by the number of hours study the examining institution (CII, IFP, etc) suggested would be necessary. Personally I find that basis unsatisfactory.
Far from suggesting IFAs were wasting their time lobbying their MPs I would urge all those who feel strongly on this issue and who have not yet done so to lobby their MP at once. A change of government will bring the FSA's future into the spotlight if it does nothing else and at least MPs will know what IFAs think of their regulator and why if and when this happens.
Finally can I also just mention that in front of the Parliamentary committee which questioned two of the FSA's leading lights recently (it was on television) Hector Sants was asked how many IFAs would be affected by the imposition of a level 4 qualification.Mr Sants replied that he did not know but offered to find out and respond by letter. Pressed to give a ball park figure Mr Sants confessed he was unable to offer even that. Anyone who thinks this has been carefullt thought out by the FSA probably still sees little men with wings flying around at the bottom of the garden.
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John Blackmore | 7 Jan 2010 7:01 pm
@ Michael - what make you think that most IFA's need more than couple of GCSEs when it comes to qualifications ?
It is true that some IFAs ( perhaps 5%) offer complex advice and I would argue that these IFAs need QCF level 6 minimum. Level 4 is just not good enough and will simply mis-lead the public. It is also true that some IFAs who do not have QCF level 6 try to offer complex advice and these advisers should be stopped.
For the majority though products are essentially sold along with the advice. These products are in the main and are fairly simple from an academic point of view. QCF level 3 is more than adequate.
The IFA is superior, if superior at all, because he or she is offering a professional, client centered service with access to the whole of market. Not because of the jam labels they have aquired.
Higher qualifications for the product based majority are a red herring showing a complete lack of understanding by the FSA.
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SIMON MANSELL | 7 Jan 2010 8:17 pm
My experience is also somewhat different to the image Nic is portraying! I have met with many MPs and was also part of a meeting with Harriett Baldwin, together with Worcestershire based Conservative PPCs Mark Garnier and Robin Walker, all of whom pledged their support to submit a joint response to the FSA consultation and to ensure that the Conservative front bench team is fully aware of the views of the IFA community. They were most sympathetic to the IFA cause and astonished at the way IFAs were being treated. Unlike many MPs these individual had all worked in financial services and had a firm understanding of what the FSA is like to deal with on a day to day basis.
Harriett Baldwin, who was until recently regulated by the FSA said: “Once again, the FSA is using a sledgehammer to crack a nut and many small local IFAs could find themselves out of business because they have not passed a new exam requiring up to 500 hours of study. When the FSA was first set up, experienced investment professionals were allowed to be “grandfathered” in as regulated persons without taking exams. I shall be urging the FSA to do the same for experienced IFAs with unblemished regulatory records. In addition, I see no reason why consumers should not be able to make up their own minds about commissions. So long as these are transparent to the buyer, why not allow consumers to pay in this way for financial advice? The last thing savers need right now are fewer IFAs and half a billion pounds of extra regulatory costs.”
Harriett Baldwin herself was grandfathered as a fund manager!
The regulator has the power to raise standards by requiring new entrants to meet new qualifications. By doing so, the regulator claim that it was taking steps to improve the quality of advice and to increase consumer trust and confidence, even though they are unable to support this with any evidence. But my point is
that that does not justify disqualifying an authorised person who has been authorised for many years and who, by definition, has been a fit and proper person satisfying the requirements of the regulator. From a
practical point of view that person has not ceased to be fit and proper simply because the FSA raises the required qualifications. It is
arguably irrational and unreasonable to say that the same person is fit and proper on 31 December 2011 but not fit and proper on 1 January 2012 simply because the FSA wants to raise standards.
The Human Rights point is that it is wrong to deprive some one of the right to practice his or her profession unless that person has failed to
meet the standards required at the time that that person became entitled to practice; ie, at the time of authorisation.
I happen to feel that "some" members of the press are better guardians of human rights than many politicians. Todate there are many journalists who have made a moral stance on this issue. RDR is anti consumer and anti human rights and yes IFA have human rights too!
To name but a few:
Martin Lewis Money Saving Expert
Janet Walford OBE, Editor Money Management Sept 2009
Marie Jennings MBE Source: Money Management Oct 2009
There is plenty room for more Nic?
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Alan Lakey - Adviser Alliance | 7 Jan 2010 9:13 pm
We know that lobbying does work - look at the BBA and effort expended on getting what they wanted out of the RDR.
It is certainly true that all manner of nonsense and tosh can be peddled if it has the consumer flag draped over it. Makes it easy for lazy politicians and career-minded regulators to push out with the usual prosaic verbiage about enfranchsing the consumer, increasing confidence, improving adviser competence.
In fact all of the soundbites that one could want.
The challenge is to interest the MPs sufficiently that they look beneath the bonnet, look beyond the glittering facade to the squalid underbelly. The reality that consumers will not be enfranchised, they will not be increasing their engagement with the industry and they will not be svaing or insuring in ever increasing numbers.
All advisers who understand the truth about what is being thrust upon the industry should contact not only their own MP but also those who sit on the Treasury Select Committee. They as much as anybody need their eyelids ungluing and they, as much as anybody at E14, will be responsible for what may prove the end of consumer engagement with independent financial advisers.
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David Chubb | 7 Jan 2010 9:46 pm
Nic loves to stir up thinking IFAs, that's his modus operandus. So it's the Chamberlain approach versus the Churchill for Nicers - pronounced the Italian way.
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Ken Boyd | 7 Jan 2010 10:19 pm
I am certain that lobbying MPs is a very useful exercise provided we go along with the general idea of improving financial services for the consumer. We have a very strong point in lobbying for grandfathering simply on the grounds that we are a proven improvement on the rest of the advising fraternity and that is from the FOS's own website.
But where we can really make inroads into the attention span of our MPs is the appalling lack of knowledge and understanding of financial products displayed by the regulator. Whenever he opens his mouth in goes his foot and that should be reported to our MPs. If we do this conscientiously and assiduously the regulator will soon shut up or improve. If, however, we treat him with craven obeisance to his every whim we mustn't be surprised that he walks all over us.
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