View more on these topics

Hit the road, Jack

I believe that we are at a crossroads in the IFA world, as we may well see some sensible changes in how the Financial Ombudsman Scheme charges, with no fee until the second or third complaint.

Prior to any celebrations, we receive the news that some IFAs can avoid fines or need not be totally solvent, as long as they are of a significant size.

Now, I am not going to begin to examine the various tests for solvency or their merits or demerits but, if you are going to the trouble of having a test, let us not then put it to one side. Nor should fines be held back. If a firm benefited from ill-deserved commission, it should pay the fine. If your firm cannot, why not your shareholders?

From the client’s perspective – remember them? – a firm that has little in the way of reserves must cause concern, irrespective of its size. As to providers bankrolling some of the more financially-challenged firms, just how do they convince themselves it makes sense to keep propping up these firms?

Clients prefer continuity. Any form of creative accounting does little to assuage their fears. If this profession is to grow and build, we, the business owners, need to invest and cut the umbilical cord that tethers us to the providers.

The idea that a client in the future will invest a seven-figure sum with a sole trader IFA is fanciful. IFAs need to start creating co-ops if they want to stay fully independent and are not to become part of a plc where the priority is email and not client contact.

Failing that, we will need a firm to mop up the smaller players or a sensible association of smaller firms which can benefit from the support of a wealthy parent.

I do not believe that many of the bigger IFAs will still be in the same form or have the same market influence by 2010. Initial reaction may be to man the barricades but, on reflection, this enforced cull has much to commend it.

We need to reflect on who is a trading risk and who is not. At least, we need to if the compensation payments are to be brought under control and not be just a product of the next trend.

The phoenix companies need to be curtailed or better still banned.

Let us hope the FSA regains its composure and ensures that the playing field remains level when it comes to capital adequacy support from providers. If this comes in the form of marketing allowances, it needs to be banned, as does providers overpaying for subsidiaries as a way round the current rules.

The late great comedian Jack Benny was often accused by his peers, Bob Hope in particular, of being mean.

If we are not to be seen as comedians ourselves, then this must be reflected in the culture of the firm and not just be a soundbite.

Jack Benny said he was not mean, it was just that he had short arms and deep pockets. The latter is what we will all need access to if we are to win ground in the high-net-worth segment of the marketplace.

On the other hand, short arms seem to be the order of the day if you have a big, unprofitable IFA firm.


Yorkshire to launch new 10-year fixed rate mortgage

Yorkshire Building Society is launching a new 10-year fixed rate mortgage at 4.69 per cent.The deal will be available in branch, online and by telephone from Friday January 27.Interest is charged daily, and loans are available up to 95 per cent LTV. ASU insurance is included free for the first six months.There is a 495 […]

FSCS set to pay back 42m surplus

The Financial Services Compensation Scheme is to refund 42m to firms in the general insurance contribution group, partly due lower than anticipated compensation in the sector. It says it is unlikely to raise the levy in 2006/07.

NU gives pledge after payouts plummet

Norwich Union is introducing a protected guarantee for new investors in its with-profits fund in a bid to revive public confidence in the asset class. Some advisers, while welcoming the news, say it comes too late for existing policyhol- der who were hit with further bad news in last week’s bonus announcements. NU revealed that […]


Case study: administration — managing group life schemes

Our client leads the global market in high-tech electronics manufacturing and digital media. The trustees of the company’s final salary pension scheme insure death-in-service lump sum and dependants’ pension death benefits for active employees, as well as dependants’ pension benefits for deferred members (those who have left service).


News and expert analysis straight to your inbox

Sign up


    Leave a comment


    Why register with Money Marketing ?

    Providing trusted insight for professional advisers. Since 1985 Money Marketing has helped promote and analyse the financial adviser community in the UK and continues to be the trusted industry brand for independent insight and thought leadership.

    News & analysis delivered directly to your inbox
    Register today to receive our range of news alerts including daily and weekly briefings

    Money Marketing Events
    Be the first to hear about our industry leading conferences, awards, roundtables and more.

    Research and insight
    Take part in and see the results of Money Marketing's flagship investigations into industry trends.

    Have your say
    Only registered users can post comments. As the voice of the adviser community, our content generates robust debate. Sign up today and make your voice heard.

    Register now

    Having problems?

    Contact us on +44 (0)20 7292 3712

    Lines are open Monday to Friday 9:00am -5.00pm