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How I learnt to love CP121

Giving up two days of my working week is not something I do lightly. The subject matter of this summit was, however, simply too important to ignore. If the future of our industry and the possibility of evolving it into a profession were to be discussed then I wanted to be there.

My mission was to make sure that the advisers who believe advice must be more than independent in terms of product choice but that it must be impartial had their views aired, no matter how unpopular this sentiment may be. So packing a loudhailer, a pair of angry eyes and a first-aid kit I set forth to do battle.

The setting was sheer opulence. The Celtic Manor. My first concern was, will they be able to rebuild this in time for the Ryder Cup as surely it was about to be shaken to its foundations as the war raged between commission-based pol- icy salespeople and those who fulfil the notion that being independent means you act in the client&#39s best interests.

So down to business. The first order of the day was to review the delegate list. Initially, I was looking to pick out potential allies and or foes but what immediately struck me was the quality of the people on the list. It read like a veritable Who&#39s Who of the higher echelons of the IFA sector. This event was obviously going to be more than simply a talking shop, this event had the opportunity to make a difference.

The tone of the welcome session to open the event appeared to confirm my suspicions that this summit may be more concerned with protecting the past than developing the future of the IFA sector. The objective of some of the panel seemed to centre on how to defeat CP121 rather than embrace it.

I, therefore, approached my first workshop with a mixture of expectation and trepidation. The topic was “background to changes”.

The format of the workshops was two or three representatives from a hosting life insurance company and up to eight delegates of which four or five would be practising IFAs. After the preliminary introductions the question was posed “Are you broadly in favour or against the proposals in CP121?”

My immediate reaction was to grab my soapbox and launch into a tirade stating that CP121 was a fantastic opportunity for IFAs to become a profession. On stopping for breath, the expected backlash of abuse was not forthcoming. It was exactly the opposite.

Everyone, advisers and other delegates agreed. In fact, many of them had arrived expecting to be very much in the minority themselves.

The consensus was that the current IFA sector does not deliver the impartiality that the public desires and therefore is mistrusted because of the perceived bias created by the availability of commission.

The second workshop focused on the AFA role. Although there was a completely different group of delegates, the consensus was yet again that the proposals in CP121 were a step forward in the professionalisation of the IFA sector.

The AFA role, which was believed by many to be an afterthought, was perceived as the ideal holding area for current IFAs to operate in during their transition to providing impartial advice in the new IFA sector or to continue the role of a product arranger remunerated by commission in the multi-tie environment.

To my amazement, there were a number of IFAs who stated that their role did not really merit the retention of the word independent in their job description.

On reflection of their business proposition to clients,I found myself agreeing with them. These people were astute enough to realise that being independent in terms of the product range you can access is completely different to being independent in terms of the impartiality of your advice. Simply by losing the tag independent, their business model would not be jeopardised.

So with two workshops completed, I departed to put on my penguin suit with a spring in my step and renewed confidence not only that the IFA sector&#39s future was in good hands but also that current IFAs who provide an excellent service to their clients would continue to do so, albeit without the burden of the independent tag.

Before going down to dinner I met with Giles Pidcock another director at Baxter Fensham. From his sullen expression, furrowed brow and the thundercloud hovering over him I deduced that his experience had not been quite so positive. To repeat his narrative would not be suitable because of the amount of expletives but his sentiments were as follows.

His sessions had completely demoralised him. The groups wanted to discuss ways of defeating CP121 and felt that David Severn was the Anti-Christ. They could see nothing wrong with the current system and any abuses were the responsibility of the FSA to detect.

As we congregated for dinner I discussed the contrasting findings of Giles and myself with several familiar faces. It became apparent that the mix of groups had been somewhere in between.

There was a growing feeling that there was a definite demarcation developing between those IFAs who believed independence referred to the impartiality of advice and those who felt independence related solely to the range of products on offer.

After a few medicinal drops of the Scottish elixir,I retired to bed promising myself I would remember some of the material used by the after-dinner comedian to entertain my friends.

The next day confirmed the beliefs of the night before. Two definite camps were emerging. The workshops continued to have their time divided by the topic at hand and the debate over what being an independent adviser should mean. The sound of the penny dropping for some people was distinctly audible.

Then came the defining moment of the whole summit.

After lunch all the delegates congregated for an open forum panel debate. A distinctly nervous John Lappin, editor of Money Marketing, opened it. He had been asked to read out a statement that he obviously felt was so controversial and of such magnitude that he felt compelled to distance MM from its contents.

The gist of what he said was that there would be a form of depolarisation in the future. Those that sell policies and those that provide impartial advice. As I had been the previous evening, I think he was surprised at the level of general acceptance that this would indeed be the case.

There followed an informative panel debate and a few more workshops on various topics. The real underlying issues though had already been decided. There was still a minority for whom the issues seemed too complex. There were even some people who felt CP121 should still be fought against.

The overwhelming majority, however, conceded that the proposals made sense and would benefit the IFA sector in the long run. Indeed, many of the delegates I spoke to were already some considerable way down the road of how their firm would be organised after CP121&#39s implementation.

Overall, this was an excellent event that brought together the highest quality of delegates and enabled them to put their vested interests to one side and debate the most serious issues facing financial services in the last 20 years. Whether it is repeatable is a considerable challenge.

The proposals are not perfect but they are a significant step forward. If the defined-payment system is flexible and renewal commission remains, then most IFAs will see their business flourish as part of the new IFA sector. IFAs clinging to the past will continue to shout about what is wrong with CP121. IFAs who believe being independent means being impartial need to shout just as loudly about what is right with CP121.

IFAs who believe being independent means being impartial need to shout just as loudly about what is right with CP121


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