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David Severn: Aifa move “understandable but regrettable”

Former Aifa director general David Severn says the trade body’s decision to open up its membership to include restricted advisers is “regrettable”, although understandable given its funding constraints.

Aifa announced this morning that restricted advisers would be allowed to join the trade body following the strategic review announced in December. Membership will not be open to single-tied advisers.

Severn (pictured), also a former FSA head of retail policy, believes Aifa has decided to broaden its membership base in response to funding difficulties.

He says: “In one way one can understand it because if the result of the RDR is that the number of true IFAs reduces, that is going to create a funding gap and they are going to need money from somewhere to sustain the organisation.

“It is understandable, but I have to say regrettable in a way. Obviously there are some aspects of the regulation of advice which are common with both tied and independent advisers. But the whole rationale for setting up Aifa was to give a voice for truly independent advisers and my preference if it could be funded would be for an organisation that supported truly professional advisers.”

Severn says the inclusion of restricted advisers may prompt IFAs who decide to retain the independent label to leave Aifa.

He adds: “The risk here is that there will be some desertion among those IFAs who are really strong on the value of independence. But the hard nosed commercial approach to this from Aifa may well be ‘so what’. It is keeping the networks and the bigger players and they are the ones who pay the money.”

Former IFA Association director general Garry Heath has warned the Aifa move to allow restricted advisers could make the trade body less relevant.

He says: “When organisations expand their footprint they become less relevant to each sector of their membership.

“As I understand it Aifa is having enough trouble as it is attracting IFAs to take up membership. If the breadth of the organisation keeps expanding, it will end up representing nothing for everybody.”

But Personal Finance Society chief executive Fay Goddard, a former Aifa deputy director general, says: “The new definition of independence is very challenging. Restricted advisers and independent advisers will be facing exactly the same challenges.

“It is important that the advisory community has a strong and united voice on the things that are relevant to all of them. I would hope that people would support this.”

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Comments

There are 4 comments at the moment, we would love to hear your opinion too.

  1. “It is important that the advisory community has a strong and united voice on the things that are relevant to all of them. I would hope that people would support this.”

    Yes it is important to be united Ms Goddard, but even the professional bodies, to whom IFAs’ pay hefty fees,choose to denigrade, rather than support them.You had better be careful, it is quite possible that the same fate awaits the PFS

  2. John Blackmore 27th July 2011 at 3:06 pm

    If the new FSA definition is accepted then I fail to see how any individual will be able to claim that they are Independent with Independence only really existing in multi- RI practices with each individual effectively being Restricted.

    The idea that any one Individual can be competent in ALL areas, especially where complex advice is involved, has never made sense.

    In practice Advisers have defined themselves as Independent simply because they work for the client and not for one provider. The new definition basically ignores this – ultimately meaning that most will eventually opt for Restricted – no matter what they say or wish for today.

  3. AIFA is paying the price for not represnting those who fund it and as stupid as AIFA is I bet you they are still in denial. AVIVA predicted the loss of 10,000 IFA’s over level 4 and AIFA sided with the FSA in their denial of grandfathering. Well if that wasn’t their death warrant then this is.

  4. I was more or less going to say the same as ZORO. AIFA & others (including networks) were like turkeys voting for Christmas. By faking concern for IFAs whilst locking them into their services, they failed to see the ‘financial gas chambers’.! Yes we have been hard hit but I feel this is the beginning of the end for ‘non bank or non direct’ advice. No only has their financial advisor members been let Down but they have left the public at the mercy of banks and direct marketeers (both profiteers). Shame on you and I will not shed crocodile tears at your demise as you did at ours.

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