FSA chairman Sir Callum McCarthy threw down the gauntlet for change when he said that the industry was “bust” and that change was both needed and inevitable.
Clive Briault, FSA managing director of retail markets, made the agenda for change clearer by announcing the detail of the retail distribution review and announcing the five work-streams that the regulator had decided would consider the future of the sector.
The five workstreams are professionalism, sustainability, incentives, consumer access and regulatory barriers and enablers. The FSA has now established taskforces to look at each of the issues in depth.
Aifa, the trade body for the professional advisory community, has responded to the challenge laid down by the regulator.
This review is of long-term strategic importance and, in my view, could be a more radical force for shaping the future of the sector than even depolarisation.
The depolarisation review focused on the tied versus independent debate but this review challenges the sector’s professionalism, its business models, its sustainable nature and, indeed, the very need for professional advice and its role within financial services.
Let no one be in any doubt as to the seriousness of the review, nor the need for the professional advice community to respond.
That is why Aifa has been so open in our views. This is no time to trot out glib statements, repeat yesterday’s answers to yesterday’s problems or ignore the need for change. This is a time for fresh thinking, honest assessment and radical debate. But the result, if handled properly, could be a bright future for every advisory firm where the role and value of advice is as well recognised as the need for legal, accountancy or medical advice.
As the trade body for the profession, Aifa has a recognised policy process that avoids making policy decisions on the hoof. It is designed to prevent rushing into any position that is less than well thought through, as our only goals are to protect and promote the profession.
We have briefed members on the process and challenge of the review, sought their opinions and, indeed, asked members to volunteer for a working party that will focus on the review.
This working party is chaired by an industry figure, Barry Kayes, who has wide distribution experience and credentials respected by the regulator.
Aifa is represented on each of the five FSA workstreams. This helps us contribute to the debate during each of the meetings, feed in views and ensure our members’ views are heard at all levels of the review.
The Aifa working party is made up of volunteers representing all strands of our membership, from sole practitioners to the biggest professional firms. They received a presentation from the FSA at the first meeting to hear direct from the regulator on the areas of key concern and the group posed challenges on the scope and agenda of the review.
Our working party has been given the task of considering the issues and has been asked to think of radical solutions that will benefit both professional advisers and their clients.
The group’s views will be formed into draft policy. This will be shared with our members for their comments and then presented to the Aifa council for its consideration.
This rigorous process ensures that members’ views are heard and then represented professionally. It also means that we do not yet have a policy position.
The regulatory clock is ticking on the retail distribution review. The FSA’s timetable suggests that a discussion paper will be produced in June, which will mean approval to proceed from its May board meeting.
The challenge for every reader of Money Marketing is the same one as usual – do you want to get involved in the review, make your views known and help shape the future of your profession or will you resign yourself to a future determined by others, shaped by the regulator and imposed on you by more powerful groups?
Aifa is the only organisation campaigning for the profession, represented on all five workstreams and with its own working party focused entirely on this issue.
Get involved today. Send me your views, volunteer for the working party and help to lead the development of the profession.
Chris Cummings is director general of the Association of Independent Financial Advisers.