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Aifa makes the right choice on restricted advice

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“I am not prepared to allow things to go on as if business is as usual because it is not as usual”. So declared Aifa chairman Lord Deben in an interview with Money Marketing earlier this year.

And so it has transpired with Aifa’s announcement last week that it will redefine its membership criteria to include certain restricted advisers in anticipation of the retail distribution review reforms.

“Pragmatism, not idealism” was the line pushed out by many associated with Aifa in defending the trade body’s move, although director general Stephen Gay was quite right to set out a more positive tone in explaining the restructure.

If the rebranded trade body is to be successful it must be proud to represent the full constituency of its membership and not treat one section like an embarrassing  little brother it has to tolerate in order to pay the bills.

If it is to be taken seriously in Parliament, Threadneedle Street, Canary Wharf and Europe it must present a strong and united front in pushing the message that decent financial advice is a hugely valuable commodity which plays a positive role in society.  Any suggestion of bickering or rivalry between the “independent” and “restricted” colleges will see the trade body laughed out of town.

Driving a wedge between the advice community through a failure to reform would have weakened the voice of the trade body and played into the hands of the banks and insurers with their large PR and lobbying resources whose interests are not always aligned, and sometimes directly opposed, to the adviser cause.

Strong representation of the UK’s unique advice landscape at a European level is only going to get more important as national regulators become the supervisory arms of a European regulatory regime. This requires significant resource and, as Aifa is already struggling with funding, a further cut would harm the interests of all advisers.

Gay last week made the moral case for continuing to represent advisers whose  definition will change due to the FSA  “moving the goalposts” as part of its RDR rules. In such instances advisers will still have to attain QCF Level four qualifications and ensure their remuneration is agreed with the client and without provider interference. Due to the new definitions of independence, some firms may calculate that they can offer the majority of their clients a more cost-effective service through a restricted route.

Would it be correct for Aifa to abandon these advisers and suggest they no longer need to be represented? Whether this ends up being a large or small number I think the answer is no.

The dilution of the independent-only message is obviously a concern but a dilution of the trade body’s ability to claim to be the voice of all professional and unbiased advisers would also be a worry.

The new trade body will comprise three colleges for mortgage brokers, IFAs and restricted advisers. As the market segments further due to the RDR it is important the needs of the diverse adviser marketplace are catered for.

But looking at the big issues facing the industry that you would expect a trade body to represent you on, and prove its membership fee, Aifa’s new expanded membership should be on the same side.

In fighting the intermediary corner over European credit directive and the repercussions for mortgage advice, in looking to influence Europe, the Treasury and FSA over compensation scheme funding reform, in continuing press the case that advisers are paying too high a share of regulatory costs compared to their risk and in looking to influence the upcoming Prips directive interests are aligned.

As such, a united adviser lobby, focused on promoting the value of  professional advice untainted by provider influence and ensuring the best interests of their clients are being served, is far more likely to succeed in influencing the agenda than a number of fragmented groups.

Paul McMillan is editor of Money Marketing- follow him on twitter here

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Readers' comments (16)

  • Spot on Paul. Sadly the industry has made it very easy for bullies to give us a good kicking over the years as a result our tendency to squabble like ferrets in a sack. Hopefully this will one day change.

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  • I just looked out my office window and whilst it is raining a squadron of pink pigs flew by.

    Never going to happen !!


    Because they are only out for themselves and there organisations.

    Call me cynical, but I have been a regional chairman of the PFS.

    I see the merger of the LIA and SOFA and the formation of all the others, who were going to change things.

    When in reality they just pushed there noses into the trough known as financial services.

    The only thing they have in common is?

    They want money- our money

    What we need is the equivalent to the law society or Institute of chartered accountants.

    Whose whole focus is too promote the beneifts of its members.

    To question and opposer the regulator.

    To educate the public etc etc.

    Of course we do have the CII

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  • @swanny I blogged about this very issue over at we need a body focussed on promotion to the public not more lobbying.

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  • Nice simple question for you. How much is your independence worth? You currently have a body primarily run and funded by providers and their owned

    Are you willing to pay £50pm for a IFA only association that actually fights for you?

    3 RI IFA at £100 pm?

    Thats the numbers that will deliver your independence - and thats the challenge

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  • I fear a united trade body is a utopian concept because the adviser world is disparate and in many instances completely uninterested.

    AIFA would be in a far more powerful position if it had vigorously defended advisers against the RDR predations. The majority of AIFA members dislike one or more aspects of the RDR yet the previous and current council argued against grandfathering and presented weak and ineffectual evidence to the TSC.

    Does this encourage advisers to join with them or does it seem that AIFA is saying jon us, give us your money and we will do what we think is appropriate regardless of your views and concerns.

    Had AIFA being robust and willing to confront these issues Adviser Alliance would not have been necessary.

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  • The truth is we are soft -far too soft.Have been for too long.We get walked over on a regualr basis.Embarrassing,really.Oh you want to remove commissions then ah great well we shall just set up a committee to explore the positive benefits of this...WHAT!!!

    All very well agreeing with everything this regulator throws at us.Its when we disagree that sets the men apart from the boys.

    And we dont really disagree with very much do we? Yes, we can himm and haaa,but can we just please say NO for once,and very loudly.

    If push comes to shove,we need to have resolve.Any new body should make that clear to members.We are no longer YES MEN.

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  • @Gary

    I guess if it was "the one" organisation and everybody was a member then costs would drop.

    Maybe, like the Law Society, membership was compulsory then the need for fringe organisations would disappear and we would all be singing from the same hymm sheet.

    Cloud Cuckoo I know.

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  • Mic2002

    Could not put it better myself !!

    That organisation exists its called Adviser Alliance and is fighting on a number of fronts already.

    All it needs is proper support from all IFAs

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  • Advisers don't need a TRADE body,they need a single PROFESSIONAL body, with its own code of ethics and disciplinary processes, like lawyers and accountants. If financial advisers had done this by now they would not have had RDR forced upon them.

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  • Gary Heath has put the case that we need to pay for a good representative trade body but we need to know that we will be looked after, our needs (as well as client) put to the fore. Every part of regulation so far has been client protection - (but with RDR they as well as us are the loosers). There needs to be a balance between protecting clients and protecting the industry i.e. don't throw the baby out with the bathwater and I think that is what has just been done with RDR. The 'baby' being non 'high net worth individuals'. I have had the pleasure of talking with a 'Money Advice Service' employee and whilst the individual is OK, the 'advice' offered is kindergarden basics. The 'advice' is at a level of where the MAS adviser listens, then giving several generic advice options and the client has to make their own selection. These are the same people that are currently claiming being 'miss sold' by IFAs for them at least giving advice based on in depth fact finds and giving real advice based on their needs.
    What we need is a trade body that will actively support us, represent us (lobby) at all levels of parliament and regulators and 'SAY NO!' when we are not protected or our rights' being diminished. So far, we have been steamrollered to extinction with AIFA & the networks allowing and indeed being complacent with the process. I think, unless we take direct action, i.e. blockade the FSA and protest at parliament, there is no need to have a trade / professional body for at least 2 years after RDR has been implemented and then it can represent those that have survived the 'culling' going forward.

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