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Bamford letter should trigger FSCS injustice talks

A couple of years ago, I remember writing an article about IFAs lobbying their MPs on some issue or other. As I recall, I was dismissive of the idea, arguing that a bunch of opinionated, ill-informed and incoherent advisers trying to argue the toss with their democratic representatives would probably do more harm than good.

That was also the opinion of senior figures at Aifa at the time, who were worried that the image of IFAs might be tarnished if everyone started to engage in self-indulgent freelance lobbying.

In the aftermath of that column, I received one or two emails from PR people, who wrote to thank me for my views and argued that it was, of course, completely right to leave weighty issues in the hands of “professionals” like themselves. A few others also agreed, pointing out that they had better things to do with their time, such as growing their businesses.

However, by far the largest number of responses came from advisers – and one prospective Tory candidate – who disagreed completely with this view.

Their argument was that, first, IFAs are the constituents of MPs and have the right to voice their opinions and try to persuade Parliament to back or oppose measures they believe in.

The second argument was that well researched and polite lobbying from constituents who have extensive know – ledge and experience on a particular subject and are generally considered to be professionals in good standing has the potential to be successful.

I could not really fault those arguments – save for the fact that, from my own direct experience of watching IFAs in action, there is always the opportunity for someone who is uninformed or lacks gravitas, but has a big mouth, to damage everyone else’s reputation by putting their foot in it.

But there is also a third reason why the process of becoming involved in public debate is sometimes best carried out by “ordinary” people and not professional lobbyists or even their trade bodies.

It is the fact that, ultimately, the only way any organisation that claims it represents their members can succeed when it argues on their behalf is if it can show that they are 100 per cent behind what it is saying.

That is why I think Martin Bamford’s open letter to the FSA, the Financial Services Compensation Scheme and the Treasury on the subject of the interim levy over investment intermediation activity is such a fantastic initiative.

Here, after all, is an IFA whose standards of probity, also exemplified by his father, are unimpeachable. Martin and Nick Bamford represent probably what is best about the IFA community.

It is because of that unimpeachable character that Martin is best suited to lead the argument against the way that IFAs are being clobbered yet again as a result of the regulator and FSCS’s inability to come up with and then apply rules that differentiate clearly between product manufacture and advice.

If scores, hundreds, even thousands of IFAs were to show their support for his open letter, for example, by signing the letter themselves and making sure their MPs know what they are doing, it would go a long way towards informing the authorities that their ability to ride roughshod over the industry will no longer be tolerated.

Of course, this being Martin’s letter, there will be elements of it that not every adviser will agree with in detail but the overall substance is correct and that is how it should be treated.

At this point, one or two readers may well ask – and what of Aifa in all this? My view is that Aifa should have organised something like this in the first place – bring together a dozen or more IFAs in Martin’s mould to write such a letter together, send it out to its entire membership and ask everyone to back it.

In other words, instead of assuming that its “real” work is best conducted behind the scenes in quiet attempts at persuasion, it ought to have mobilised.

That, after all, is the only way in which those in authority will begin to understand the IFA viewpoint.

What should Aifa do now? I think it ought to back this letter as if it had been written at Austin Friars House. It needs to become infinitely more energetic, publicly so, in its attempts to persuade Mark Hoban and others that an injustice is being perpetrated on the IFA sector over the current funding rules for the FSCS levy.

This is also about Aifa persuading IFAs that it is committed to defending their interests. Sending out a circular, or writing a mealy-mouthed progress report cum viewpoint will no longer cut the mustard.

One final thing – the essence of successful lobbying is about finding the right issue to lobby about. The implementation of the RDR is not that issue as the FSA is, for a change, right to insist on higher professional standards for advisers. But on a question that risks costing many individual businesses thousands of pounds each, this surely has to be worth sticking your head above the parapet for.

Nic Cicutti can be contacted at


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There are 24 comments at the moment, we would love to hear your opinion too.

  1. Yes, AIFA ought to be more proactive and be seen to be so. That having said, I think we should bear in mind just how little, if any, ground has been gained in the wake of the Parliamentary debate on the RDR last year, led by Harriet Baldwin and Mark Garnier.

    Hoban trotted out his usual tosh about how the FSA ( is completely independent of government (so how come government, which set it up via Statute in the first place, has the power to disband and replace it?) and all we’ve heard since from the FSA is that the RDR will go ahead as planned (and to hell with anyone else’s views on the matter).

    I have to say I fear that all these campaigns, action groups, open letters and all the rest of it amount in practice to little more than small groups of oppressed individuals shouting in the woods and rattling little tin sabres. The FSA ignores them.

    What is really needed is a massive and fundamental reform of the whole regulatory system, with a view to putting an end to the assorted injustices routinely dished out by an unelected and unaccountable, all-powerful and legally unchallegeable quango. Everything else is just red herrings.

  2. Massive reform is all well and good but who is going to get the ball rolling?

    I thought you may like to see the response I got from AIFA regarding the FSCS Levy:

    “Unfortunately the legitimacy of this levy was recently determined in a Court of Law when the application for a judicial review was turned down. Whilst we believe that the levy is the result of regulatory failure, withholding payment is a business decision that each firm can make. We are unable to encourage our members to take action that could result in fines and/or disciplinary action with the potential withdrawal of authorisations by the FSA.

    We will continue to lobby FSA and FSCS for a fairer, more appropriate system which delivers better supervision to prevent this happening again in the future. We are in direct discussions with both at the current time”

    So not AIFA then?

    Any volunteers?

  3. Good article apart from the last paragraph,as it seems contradictory to say that RDR implementation is not an issue to lobby about but something that risks costing individual businesses thousands of pounds is. My business will go belly up if I take the time off to study for exams that will not improve my capability (I have seen some of the exam papers). I am working Sundays as it is.

  4. “Martin and Nick Bamford represent probably what is best about the IFA community.”

    There are thousands of practioners out there that fit this description, but go about their daily work without the necessity to create a public profile.

    I would like to think there are more good than bad and maybe its about time those that regulate realise this .

  5. A good idea but I’m not sure someone like Martin Bamford has enough respect from the IFA community to be backed.

    Come on AIFA, Mr Bamford has got the ball rolling – how about you putting your weight behind this, designing a similar letter and collecting signatures ??

  6. Aifa do someting – stick their neck out?……Nahhhhhh!!!

  7. @nic cicutti

    Nic thank you for your kind comments

    @ Swanny

    Agree there are indeed many very, very good IFAs out there. Sadly we don’t know if you are one of them as you don’t state your name

    @Anonymous 1.05 pm

    He has had over 400 IFAs back him- is that enough respect for you?

  8. Nick

    Make that 401… and rising I am sure

    Interesting that the IMA is now considering a judicial review why don’t AIFA and IMA join forces and go for a joint review.

  9. “He has had over 400 IFAs back him- is that enough respect for you”?

    In the scale of things-no

  10. “there is always the opportunity for someone who is uninformed or lacks gravitas, but has a big mouth, to damage everyone else’s reputation by putting their foot in it”

  11. I’m afraid I agree with you fellow Anon 3:58pm & 3:54. 400 is a drop in the ocean.

    Think of how many more supporters a co-ordinated body like AIFA could achieve.

    I’m sorry Nick – don’t get me wrong, it’s great that Martin has put his pen to paper but he won’t get the support of the whole IFA community.

  12. Whilst not being the greatest fan of Martin Bamford, I have signed the letter and very much hope that it succeeds. It should be remarked, I think, that not all IFAs will have seen the postings and/or are not internet savvy enough, which is why a figure of 401 signatories so far is but a ‘drop in the ocean’.
    Now, if the dearly beloved FSA had any ba**s at all, THEY would issue a very similar letter to all individual IFAs and ask them to sign the letter if they agreed with the general comments – presumably that way they would get a full and fair response. I’m not, though, going to hold my breath ……..

  13. @anonymous 3.54

    400:1 seems a pretty good scale to me

    Have a lovely weekend

  14. I do not see eye to eye with Martin and Nick re the RDR…but they do have my full support in respect of the FSCS.

    Too many sit back and take it on the chin. We really need to stand up and make a noise.

    Just think, if AIFA had stood up to the FSA and represented the interests of the bulk of their members then there probably wouldn’t be an Adviser Alliance. Unlike AIFA officials we don’t get paid and we still have the difficult task of running our own IFA practices.

  15. As posted elsewhere on this site:

    Having just received my paper copy I see that there is a lot of space devoted to this topic – quite rightly.

    However there are a couple of additional points that arise. Martin Bamford and Tony Byrne, both first class IFAs I’m sure, seem to have overlooked one vital point. Under RDR we are now more or less compelled to consider these products if we are to retain the Independent title. I concede that it does not necessarily mean that we have to use them. But therein lies the rub. How do you know that the Regulator won’t take issue with you eschewing these products? Will that put your independence at risk? Will you therefore be shoehorned into being a Restricted ‘Adviser’? (I put adviser in this case in parenthesis!)

    Tony Byrne is right to take issue with Peter Smith. I have listened to him on several occasions. I have concluded that he is to emollient and diplomatic interaction what Genghis Khan was to social work. He seems to me to be bellicose and aggressively disparaging of IFAs in general and seems to seek wherever possible to cast us in the worst possible light. Paranoia? Am I being too sensitive? Well I guess we’ll find out if he steers the new proposals through the new regime.

    As to apportioning liability to those who have been judged to have used the ‘risky’ products. This really is entering murky waters. It will give leverage to regulation by hindsight. Think of Zeros. Lauded as low risk on the Regulator’s web site. But not all Zeros were toxic – some indeed were (and still are) quite good and a useful tools. Under these proposals, perfectly good IFAS who had recommended perfectly good Zeros (as opposed to the incestuous ones) would be (unfairly?) clobbered.

    I’m afraid some of these comments have – understandably – been knee jerk reactions.

    Oh, and fort those of you who incessantly criticise AIFA – why not then try to change things by:

    a) Becoming a member
    b) And /or trying to get elected onto the council.

    Far more effective to snipe from the inside than from the outside – but then that requires commitment and hard work.

  16. Some IFAs share of the compensation scheme appears to have been very much on the light side in previous years, businesses with near a million or plus turnovers paying £4K, while small IFAs with less than £100K turnover paying nearly £2K, before this recent change.

    IFAs need to be careful exactly what they are supporting, the firms which are pushed in to their category, the premiums paid by other divisions of the scheme and breaches or the new calculation compared to the old.

    I have a feeling that the 400 who have put their names to this have probably not being paying their fair share before the change based on income. Although others may have joined due to Keydata without thinking much further.

    Careful that you are lobbying for the right cause, Alan Lakey please be careful too as you are gaining much support amongst IFAs and many eyes are on you to join in the future.

    The scheme needs altering but not from the new charge based on income, I think that is fairer.

  17. I really get annoyed with the mouthy anon mouses bad mouthing people without the decency to put their name to the articles.

    Both Nick (both) and Martin are correct that a levy to a business sector (many with no exposure to the main culprit Keydata) to rise by over 600% is a disgrace and is a subject that surely should unite a very divided bunch in complaining,

    Martin/Nick, yes we will sign the letter and yes we will lobby our local MP. To the rest of you, shame on you.

  18. Even in these replies we see back biting between us…….come on all IFA’s lets get together as one voice. Nicks had the courage of his convictions to speak up for a profession he obviously has a passion for, well done Nick!

  19. Apologies, Martin, not Nick, chip off the old block though!

  20. Well said Alan Lakey

    We are at the cusp of getting some real changes made and we will either succeed by working together and leading us forward in the best direction for all or fail by letting those who claim to know what is best but do not have the ears and eyes of us and or clients, who are the real people we all care about.

    Communication, understanding and listening must be two way in order to work.

  21. I’m a multi-tied Adviser with Openwork.

    I very much sympathise with IFA’s having to afford a huge increase in the FSCS as at the end of the day WE are all in this together and suffer at the crazy decisions made by the FSA.

    If AIFA are as toothless as it seems, why cant WE elect a ‘new’ body that will stand up for the Adviser, IFA or otherwise and tell the FSA to go stick their FSCS and RDR where the monkeys put their nuts.

    If AIFA cant or wont stand up to the FSA then I would cancel my subscription, just like I have done with the CII.

  22. Let’s not forget that Aifa would have been consulted when the current FSCS system was set up so they have always known that the potential for what we have recently experienced existed. They may have thought that the possibility of such an event was remote enough to be worth running with but it has and maybe this is the reason for their shoulder-shrugging, looking-at-their-shoes response to this latest levy? I’m afraid I remain convinced that there is a lack of both pride and intellectual clout at Austin Friars and Aifa, as a representative body, has run its course. IFAs need to be represented by people with commitment and a sense of pride in what we do. Enough with these self-serving careerists for whom Aifa is just a stepping stone and who don’t seem to mind leaving a steaming pile of dung behind them. Alan is spot on – Adviser Alliance’s support and, indeed, the support for Martin’s letter is more than enough proof that Aifa has lost momentum, lost the high-ground and lost the right to claim that it ‘represents 80% of IFA businesses’ – up to them to prove me wrong on that one but I doubt if they can.

  23. Harry, more than happy to rejoin Aifa when they are prepared to be judged by results like the rest of the business world, not because they are ‘trying ever so hard’.

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