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End of year edge: Ken Davy

2004 brought depolarisation, a big hike in the compensation scheme levy and the departure of Paul Smee from Aifa. But cheer up, it also saw M-Day pass relatively smoothly and there was even a fall in the number of FSA consultation papers.

Doesn’t time fly when you are enjoying yourself? I can almost hear some IFAs respond that this year has felt like eternity.

Clearly, if you were unfortunate enough to be involved in one of this year’s highprofile network failures, such a view would be understandable. Equally, if you were one of those hoping that your share options were going to provide your pension, and who then lost out when many of the paper promises failed to materialise, you will also be glad to see the back of 2004.

For countless other IFAs, though, it has been a year of solid achievement against a background of continued change and uncertainty.

We all entered 2004 with some trepidation. Investment markets had been flat and, apart from housing, the only growth area was FSA consultation papers.

The good news is that, far from continuing to increase, the number of FSA consultation papers has been halved in 2004 although about one every two weeks still feels like overkill. Unfortunately, the FSA blotted its copybook by not being able to publish the rules on depolarisation until December 1.

Depolarisation is the biggest change to the structure, delivery and sale of financial products to hit the industry since the start of regulation in 1988. For the FSA not to publish the rules until the very day they took effect was a massive own-goal, notwithstanding that we all have another six months to put them into place.

Fortunately, depolarisation is not an issue for the vast majority of IFAs. While it is seen as good news for banks, we have quite strangely seen Bradford & Bingley move to a single tie.

A good IFA has always provided real choice and high-value service, which is why IFAs are highly valued by clients and professional connections. I am very confident that this is not going to change and that networks and others who are betting on IFAs switching to multi-ties are in for some disappointments. I have yet to see any coherent argument as to why any IFA would want to do so.

Last month was the start of mortgage regulation although I suspect that some mortgage advisers have yet to realise it. Nonetheless, many thousands of mortgage firms have successfully registered and great credit is due to the FSA for ensuring that this complex task was completed reasonably smoothly.

November also saw the publication of this year’s Henry Samuels membership satisfaction survey of networks and service providers. Modesty prevents me from waxing lyrical about the results – suffice it to say that Simply Biz came out head and shoulders above the competition. Interestingly, some 88 per cent of IFAs now use external compliance support.

One big change in 2004 was the departure of Paul Smee from Aifa. Smee was a great champion of the IFA and he will be sadly missed. He has simply gone to watch paint dry at a banking-type organisation but, with his personality, I am sure he will liven things up a bit.

The FSA’s David Severn takes over from Smee and it will be vital that he continues to build on the good work that Aifa has been doing for IFAs.

After a few blind dates and flirtations, this year has seen the marriage of the LIA and Sofa, with the CII acting as godfather. Although by no means universally popular, the creation of the Personal Finance Society does offer a real opportunity to complete the journey to full professional status which the LIA started in 1972.

No review of the past year would be complete without a mention of the Financial Services Compensation Scheme levy. This pernicious, arbitrary and wholly unfair levy is nothing more than an unwarranted tax on IFAs, who are forced to pay for the failings of defunct firms over which they had neither control nor influence. This year the levy was increased significantly, coupled with a limited but still much appreciated increase in product provider support.

I believe the current system is an affront to natural justice and I am determined to do everything I can to see it abolished and replaced by a fair system which protects consumers without putting at risk their most valuable source of financial advice. The early signs are encouraging and I am hopeful that we can make real progress.

As we enter 2005, I believe that as IFAs we can be proud of our achievements in the past year and look forward to the new year with renewed confidence.

Ken Davy is chairman of Simply Biz


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