An invitation from the FSA

11 November 2009

Alan Lakey

I have been fending off inquisitors demanding to know how I felt about Aifa replicating the Adviser Alliance policies in respect of the RDR.

As I related to the enquirers, I do not have a problem with this because ultimately we are all on the same side. In fact, it has to be taken as a compliment, particularly as I have been banging this drum for ages. It is indeed intriguing whether, as Nic Cicutti has suggested, the volte face is due to the formation of Adviser Alliance. As has already been well documented, we are receiving support from a multitude of advisers, many of them existing and previous Aifa members, all of whom feel that a more focused and robust approach is required.

Over the last few years, I have regularly prodded Aifa suggesting it needs to wake up and fight. Chris Cummings once used the analogy that I like to kick down doors whereas he sneaks through them when nobody is looking. Latterly, he prefers to describe his actions as striding down corridors where doors miraculously open as he approaches.

Regardless of the reality, the point is that any adviser-supporting organisation has to take note of its members concerns and the vast majority of advisers are extremely concerned about the RDR proposals. The fact that they are being promoted during the worst economic downturn in 75 years only exacerbates the damage potential.

Aifa will suffer a massive exodus of members if the proposals come to fruition and will also lose the confidence of those members remaining. This will seriously jeopardise their standing and could even result, ultimately, in its dissolution.

One or two observers have questioned why there needs to be fragmentation and why various bodies are needed. One answer is that you cannot please all the people all of the time, the other, less clichéd response, is that Adviser Alliance is operated by practising financial advisers who not only hear about the matters that affect advisers but also suffer them personally.

This focused approach means we do not spread ourselves too thinly and allows us to concentrate on those areas of dispute where we have an intimate understanding. Additionally, it is being run on a non-profit basis by advisers who are also anxious to keep their businesses afloat amid the market turbulence.

Now, the reality is we are happy to let Aifa work with us on these struggles and, hopefully, it will not be the last time that our interests are aligned.

Next week, as the result of an “invitation”, I will be meeting with the FSA as part of its treating customers fairly project. This got me thinking afresh about regulatory imbalance. Apparently, we are guilty until proven innocent when it comes to TCF and this is not dissimilar with regard to the lack of a long stop. The FSA wants evidence that restoring the long stop will not cause consumer detriment. The notion is at once ridiculous and laughable because, in its simplest sense, any adjustment of the current imbalance must perforce mean that somebody’s improvement will result in somebody else’s loss.

Now this is particularly clever of the FSA because it is a question that can never be answered to their satisfaction and allows the current imbalance to continue.

The question that should be asked, as numerous MPs are currently doing, is whether it is fair and rational in a civilised society that one particular segment is targeted for special treatment.

Can you imagine the hue and cry if a similar discrimination was committed against the disabled or the Jewish?

Alan Lakey is partner at Highclere Financial Services

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