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Aifa needs to show some fighting spirit

A couple of weeks ago, just before the new year, one of my regular correspondents sent me an email. This person is an IFA and has been round the block a few times.

We do not agree on many things. Indeed, we tend to find common cause on very little. But his semi-regular caustic take on the industry is always a pleasant distraction from the pressures of a deadline.

Anyway, just before Christmas, this guy emailed me to comment on Aifa’s announcement that it is to hold a root and branch review into the way it operates, consulting with members about its purpose as well as the scope of its membership.

By his own account, my correspondent experienced several such reviews in the 1980s and 1990s when he worked for several life companies before becoming an IFA. His experience made him extremely cynical of the processes involved.

“What a load of old bol*ocks,” he wrote. “Reviews like this are always a waste of time. Their only purpose is to provide the cover needed to take the organisation in the way you want it to be changed in the first place.”

It is hard to disagree with him. For example, if it is the case that Aifa will consult with its membership over allowing restricted advisers to remain within the trade body, then the outcome is unlikely to be in great doubt.

After all, Aifa’s Advice Horizons paper last year indicated in a not too subtle way that while genuine independence remained “the gold standard” for IFAs, restricted advice was the next best thing for addicts unprepared or unwilling to give up their commission-based remuneration. It is almost certain that, faced with the possibility of retaining its ideological purity but losing up to 25 per cent of its members who opt for restricted advice, many senior figures in Aifa will prefer the softer alternative.

In many ways, however, the issue is less that of who belongs to Aifa and much more one of what Aifa is for.

The evidence suggests increasing numbers of its members do not know. In my last column last year, I suggested that in the previous 12 months, we had gradually seen the development of an online claque of IFAs, unremittingly resistant to almost any change within the industry and desperate to cling on to past ways of doing business.

This group has, to a large extent, succeeded in framing the debate in its own image. Its voices are the only ones heard and the stridency and unremitting hostility to an A-level-grade qualification for advisers is something to behold.

Even more staggering is its demand for an extension of the deadline by which this qualification requirement must be met. These people have already wasted more than two years since the FSA’s plans were first mooted. Now they tell us that the two years they have left do not give them enough time to pass the exams they knew were always likely to be a new professional requirement. They have repeatedly abused Aifa for perceived failures in defen-ding “their” interests – which they perceive as synonymous with those of all IFAs.

Yet what is even more striking about this online debate is the near complete absence of anyone willing to stand up in favour of Aifa. It is almost as if the trade body’s rank and file are no longer confident in the ideas of the organisation they belong to, to the point where they are unable to defend what Aifa stands for.

All this has profound implications for Aifa, the most important of which is that unless you are prepared to have a vigorous internal and external debate, you will be marginalised. That is increas-ingly what is happening.

But just as it is necessary to have that debate, it is also vital to put forward a clear and unambiguous message.

For example, to simul-taneously call for “greater flexibility” over the intro-duction of the RDR while confessing that you are unlikely to be able to significantly affect the FSA’s deadline earns you no respect from either side. You also have to have some understanding of tactics and of picking the “right” fights, even in cases where the prospect of victory is not certain.

Last summer, Aifa had a choice as to whether it would back legal challenges to the Financial Services Compensation Scheme over its £80m levy in respect of Keydata and other collapsed firms labelled as “intermediaries”. It chose not to, arguing that it had obtained legal advice suggesting that it stood no chance of winning.

This was an issue that needed to be fought to the hilt, even at the risk of losing. Leaving Regulatory Legal to represent IFAs in this battle was a bad tactical mistake.

For Aifa’s review to bear fruit, it will be necessary to be far more daring than it has ever been. On past evidence, I do not see that happening.

Nic Cicutti can be contacted at


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There are 15 comments at the moment, we would love to hear your opinion too.

  1. Nic

    First things first, according to company reports in the fund management sector IFAs weren’t the only ones paying FSCS levies towards the compensation required thanks to the collapse of Keydata. Have we been misled?

    As far as the ‘online claque of IFAs’ is concerned some of them are actually making matters worse, as I may have done in the past and Garry Heath did before that.

    I believe AIFA needs to sort itself out, a radical reform is required because the future looks grim for any intermediary smaller than ‘Mid Cap’, or any other financial services firm the EU can’t find a cubby hole to put it in.

    Chris Cummings said he wished he had been able to get the AIFA message across better than he did, Paul Smee before him thought he was ‘damaged goods’ following the TSC grilling, they are good men but dealing with the braying mob is soul destroying, they can never be sated. As far as the question what is AIFA for the fact is that it plays the game but it doesn’t have as much respect among regulators or politicians as it may wish, I think the problem lies with the Council and other constitutional matters, from where I sit I can’t see how these issues can be resolved but perhaps the only way forward is to do what we did last time when Garry Heath’s outfit became a thorn in the establishment’s side, start all over again, maybe this time we need a representative body for the regulated, could it be an EU wide one?

    The regulators can’t cope with all these ‘trade bodies’, I believe it would like to deal with just one, this is unlikely to happen but we must try to silence some of the claqueurs (not all) who are clearly short of something constructive to do, perhaps they could try some education?

    Dear establishment, can we work together?

  2. I’m unsure as to whether I’m one of the “claqueurs” but just to clarify my own position:

    I am against the driving out of IFAs of a certain age from the industry when they have 20/25/30 years blameless service to their clients but cannot or indeed will not take further exams. Why should they? What right does the FSA have to drive out decent IFAs from the industry? New entrants maybe should be subject to higher qualifications but not existing good IFAs

    Yes I guess those of us who have issues wth the RDR will voice them and risk some idiot referring to us as an “On line claque” but at least we care enough to make our opinions known.

    As far as AIFA is concerned I am beginning to query the benefits of belonging to and subscribing to an organisation which purports to represent IFAs (the clue is in the name of the organisation) and which on the face of it on this issue does no such thing

    And as a matter of interest I have lots of better things to do-running a business is one of them-but I choose to contribute in the vain hope that some other IFAs may agree and between us we can overcome the smugness and apathy that some of our peers demonstrate.

  3. Why is this subject, within this industry, always made out to be so complicated?
    Independent advice is pretty well self explanatory by definition and, whether it’s fee or commission, the client always pays!
    Many a comment has been made about imposing an industry wide cap on commissions to take away commission biased sales, but neither AIFA or FSA or anybody else for that matter, ever responds. Is it because it makes it too easy maybe?
    Of course advisers should be qualified at an agreed level to give advice – once qualified, the regulation of advice and sales is quite simple really! The cost of regulation could be significantly reduced if this sort of stance is taken instead of continuing with the imposition of rules and creation of expensive jobs within regulatory organisations! Let’s just do the job in the way in which the clients are asking for it!

  4. I guess I could also be described as a fully paid up member of the “online claque of IFAs” which Nic refers to.

    I have been critical of AIFAs lack of support for Grandfathering which has been interpreted as my been in favour of Grandfathering.

    However, my critisism revolves solely around AIFAs apparent non adherence to two of its own stated principles which I quote below,

    “To present the collective view of our membership to the regulator and those policy makers who have an impact on the IFA market place and the business operation of IFAs”

    “To collate the views and experiences of IFAs and interpret them to formally challenge policy and the regulator”

    I have asked the question, what steps did AIFA take to ensure that its stated non support of Grandfathering was indeed the collective and collated view of the membership?, not an unreasonable one giving the serious implications of this legislation to its members.

    AIFA have since informed me that no research has ever been undertaken amongst the membership in this regard and that the decision not to support Grandfather was taken solely by the AIFA council.

    From this its not unreasonable to conclude that AIFA are unable to properly demonstrate that the decision not to support Grandfathering was indeed the collective and properly collated view of the AIFA membership, as per its own mission statements.

    A reasonable person could be forgiven for thinking that perhaps the reason the quesion was not asked in the first place was that the membership answer could possibly, or probably have been one which did not sit comfortably with the AIFAs councils own internal objectives and opinions and more importantly, with the regulators.

    It may therefore have been easier not to pose the question thereby avoiding any subsequent embarassing politically sensitive response.

  5. Have we all seen the “DRAFT” submission AIFA is proposing to make to the TSC? If they actually send this then it is the end of AIFA.

  6. To correct something in Nic’s article, ALL advisers will have to have Level 4 AND implement Adviser Charging. Choosing to follow the Restricted route does NOT give anyone a get out of jail free card on either requirement.
    Not only does actually having the review imply the outcome of the review, but the original appointment may have had some bearing on starting the review. The Board approves the new DG who then has a review. Translation : the Board wanted the review and recruited someone to whom a review and subsequent change to include Restricted would be acceptable.
    AIFA will have an eye on (a) its members and (b) its income, whether subscriptions or sponsorship. It clearly thinks there will be more Restricted than Independent in the future, so questions its role (and financial viability).
    I would personally have spent more time explaining why I don’t think anyone needs to be Restricted and why Independence, generally recognised to be the only topic that the poor benighted consumer seems to understand and value, is something worth fighting for (even if a few members leave and a few product providers or mortgage members leave as a result.
    Lord Gummer and the rest of the Board need to realise that it is possible to build your empire from a smaller base – but it requires passion and commitment. And that’s why they needed an IFA to be in charge right now.

  7. I hope I am one of the ‘claquers’ because the name of the game is lobbying and trying to make a difference.

    Some years back I likened Chris Cummings to Neville Chamberlain waving a piece of paper. My view of AIFA has not changed over this period and it seems that they want even more splinters in their bums when it comes to the RDR.

    Thhose advisers who ‘enjoy’ membership by virtue of their network arranged auto-enrolment need to consider carefully whether this behaviour is what they pay their membership fees for.

  8. Claquer ? Yep me too.

    AIFA has been a dead man walking as far as IFAs are concerned for years difference now is that all at long last can see.

    Very important point is the fact that Networks control and bankroll AIFA and as such speak for all within their network it is therefore very easy for AIFA to state majority of their members are pro RDR. Come on AIFA have a free vote and ask every individual within the membership and within the networks if they are pro RDR then we will get the true picture. What have you got to fear AIFA ? after all, you would not seek to mislead the TSC with the comment you made in the draft response.

    Blaggers always get found out in the end.

  9. Steven Farrall (Adviser Alliance) 6th January 2011 at 2:52 pm

    For the avoidance of doubt I have been what is now called a ‘new model adviser’ – i.e. fee charging and all the rest of it for nigh on 20 years. but, I totally reject the RDR. Why? Because it is none of the business of government or its dysfunctional bureaucracy as to how free agents agree to do business in a free society. The FSA is by definition ignorant of the values and motivations of the 60 odd million people in the UK other than itself. It cannot ever know enough to be successful at this, at least not successful short of communism. And even that that will fail as we all know. Central bureaucratic planning never works.

    From my own experience I can state that the existence of the regulation and in particular the FSA has inhibited the development of the market for retail financial services. Its sclerotic rules have inhibited change and development and taken lots of welth out of the economy.

    Mr Cicutti appears latently statist and corporatist. he appears to put faith in the universal wisdom of a state appointed functionary. This is patently absurd, as they are people just like you and me.

  10. We agree on something at last Nic.

    AIFA is a dead man walking.

  11. Upon reading that AIFA weren’t going to publish the results of their online members’ survey, I felt disinclined to participate. But, at the urging of a colleague, I did so today.

    I have to admit the topics it covers and the way in which the questions are framed are all very pertinent to the many concerns and criticisms raised by members and non- and/or ex-members alike.

    On the strength of this, I urge all those able to do so to complete the survey. We cannot know just how much notice of or action on the results AIFA will take, and I still think they should publish the findings of the survey. But, in my opinion, the survey certainly warrants participation.

  12. AIFA seems to have an internal voting system akin to that of the (erstwhile) Labour Party. Individual party members vote for what they feel to be right. The votes are counted. The wrong guy gets in. The reason is the block vote of the Unions (networks) which have never consulted the members.

    Moral; If you want Ed Miliband for head boy you simply spit on democracy.

  13. IFA members through block Network membership! 7th January 2011 at 4:23 pm

    The AIFA support for the FSA over their refusal to accept grandfathering beggar’s belief and again raises questions of the role of Networks who fund AIFA and who would benefit from this stance! AIFA claims to represent IFA’s but we must also note that many IFA members are members of AIFA not through choice but via block Network membership!

  14. I believe it was the late Robert Maxwell who said something about trust being like virginity – one it’s gone, it’s gone. AIFA has lost the trust of IFAs and however noble the intentions of its new Director General, I do not believe it is capable of regaining trust. Nic’s call for it to show some fighting spirit is, I fear, about 2 years too late.

  15. We stopped any money years ago going to this self serving ship of fools. Out of touch, out of their depth and utterly useless. Not unlike most M.P.s in fact. By the way, what’s a claque ?

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