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.
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.”