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Aifa’s view – David Severn

Looking back at the 1999 report establishing Aifa, it is interesting to note the enthusiasm and optimism about the extent to which technological developments were thought likely to revolutionise the way that people do business.

The Aifa report goes into rapture when it speaks about the trade association of five years’ time communicating with members entirely by electronic means. It has been just over five years since that report, so how are we doing?

Aifa does email newsflashes and other communications to its members. So does that mean the future has arrived? Unfortunately not. Aifa has many members for whom it has no email address. Those members get their communication by fax, which I suppose one could claim to be “electronic means” but I am not sure that is what the Aifa report had in mind. One IFA resigned because we would not send him hard copies of all our publications by post.

There is a risk that I am going to create yet another industry myth – that all IFAs are in the stone age when it comes to IT. That is not true. IFAs are a diverse lot and many are real pioneers and at the cutting edge of applying IT to their business. It is just that there are many who are laggards in the IT stakes. This has to change.

IT is not a magic solution which will solve every problem an IFA has but IT is an essential complement to the business which can improve speed and accuracy of dealing with a client’s affairs, help lower costs, provide a robust audit trail helping a firm to defend itself against any regulatory inquisition or complaint to the FOS, provide tools to assist with asset allocation and assessing a client’s attitude to risk and help provide the client with a better service. I will be looking for ways in which Aifa can help reinforce the message to members about the need to grasp the opportunities provided by IT and to see if there are any practical ways in which we might be able to help.

I mentioned above industry myths. If I did not know better, the message I would take from some regional meetings is that every other client of an IFA is a serial complainant and the FOS always finds in favour of the client. It is simply not so. Of all the complaints that go to FOS, only 9 per cent are in respect of IFA firms. Of the complaints about IFA firms, the FOS finds in favour of the firm rather than the complainant in two-thirds of cases.

I would like to reassure members that on most days lunch for me means a sandwich at my desk while I zap unwanted email. But last week I was invited to Mansion House and shared a table with, among others, the Lord Mayor, Jeff Randall of the BBC and Lord Currie, chairman of Ofcom, which regulates the communications industry. In Currie’s speech he said that Ofcom has 25 per cent fewer people than its predecessors and lower operating costs. Its 2005/06 budget is 5 per cent less than in the 2004/05 and during 2005/06 it aims to reduce costs by 5 per cent more. He said: “We will continue to be an RPI-x regulator.” Now, wouldn’t that be a nice example for the FSA board to follow.

David Severn is director general of Aifa

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