This is where your trade body comes into its own. It is our job to read every inch of this document and tell members what it may mean for them and how Aifa is going to respond to these proposals.
Whether or not we agree with the FSA’s starting point – the need to “improve” the retail distribution model – I will tell you why we must engage in dialogue with the FSA on this review but first I want go over some background.
It is no secret that it is the Government’s policy to improve financial capability, increase the savings ratio and find a solution to the debt problem, all of which are admirable goals.
The Government has also been looking at ways that financial services can help solve all these problems. In 2001, the Treasury commissioned Ron Sandler to review the medium and long-term retail investment market and the RDR has already been in the pipeline for two years. Although some of the proposals in the Sandler review that were deemed unsuitable have re-emerged in the RDR, to achieve the Government’s objectives, it is extremely unlikely that the FSA is going to stop this review even if IFAs launch a full-scale attack deploring it.
Those that have been following our work on the RDR over the past year or so will know that Aifa has been represented on all five of the FSA and industry-led RDR working parties as official observers.
During the process, we used our lobbying skills to influence the working parties to ensure that the final discussion paper would be more consumer-friendly and supportive of the IFA profession than the early drafts. Although the current discussion paper may not seem IFA and consumer-friendly, the proposals are a lot better than some of the ones originally suggested by the working parties. Aifa’s experience of the working parties is that we can influence through dialogue with rational and constructive criticism.
The IFA profession provides an invaluable service to its customers. The profession can also help the Government meet its public policy objectives. There-fore, there is no question about ensuring that the UK has a thriving and vibrant IFA community following the RDR. The only area of conflict is the model in which we operate. I think we can find a model suitable for both our profession and consumers.
I have discussed the RDR with senior politicians and civil servants (in addition to having an ongoing dialogue with the FSA). Nearly all agree on the importance of the IFA community and a significant number also seem unconvinced by the FSA’s proposals.
We will shortly publish an analysis of the RDR and briefing papers for mem-bers on each of the key issues raised. Please take time to read them and respond with your views.
The RDR clock is ticking and the six-month discussion period will quickly pass. It is time to stand up for the IFA profession.
Write and let the FSA know the value of professional, independent, financial advice. Help and support Aifa as we fight for your future.
Chris Cummings is Aifa director general