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Nic Cicutti: Could we see a mega-merger of adviser bodies?

Nic Cicutti

What would happen if all advisers’ trade and professional bodies came together under one big umbrella?

I am prompted to ask the question this week by reports that a review of trade groups in the banking sector has recommended a merger between the British Bankers’ Association, the Council of Mortgage Lenders, Payments UK and The UK Cards Association.

The potential merger of bodies representing the banking and finance sectors is proposed by former Ofcom chief executive Ed Richards, who led the review.

Consultations over the precise form of such a merger will now take place, with a final decision expected in February. Should the trade bodies vote in favour, a new association could be launched in May and be fully operational by November 2016.

Apart from the fact a merged body would effectively represent many of the key functions of retail banking, another benefit, at least as far as Richards is concerned, is the reduction in costs for those involved.

His review estimates member fees could be cut by 30 per cent, delivering savings of more than £32m over the next 25 years. While some £16m costs will be involved in the restructuring exercise, Richards suggests the merged body could be on an even keel in about three and a half years.

There are, admittedly, all sorts of issues to be resolved before such a merger takes place. In some cases the way members are represented differs: for example, the CML’s constitution is structured on the basis of one member, one vote.

There are also clearly some strong personalities involved in several of the trade bodies, with many individuals jockeying for leadership positions. Or, just as likely, many will fear being left standing when the music stops and several executive chairs have been removed. Both the above are powerful disincentives for members to agree to merge.

In the case of the BBA, it is also facing a class action lawsuit by the US regulator Federal Deposit Insurance Corporation on behalf of 38 US banks that collapsed after suffering heavy losses. The FDIC accuses the BBA, which administered Libor, of participating in rigging the scheme to protect its revenue streams and to appease banks on the Libor panel. Ring-fencing any liabilities that might arise from this case will be crucial.

But in the event that the trade groups merge, a body will be created that has infinitely more power than the individual components could ever hope to wield on their own.

Hardly surprising, therefore, that while the Building Societies Association has said it does not wish to take part in the merger talks, Nationwide is prepared to consider joining.

Could the same impetus for unity and improved representation take hold among advisers? On the face of, the answer has to be no.

Apfa remains in dire financial straits and seems incapable of articulating a strategy for advisers going forward. The idea that advisers might want to form alliances or engage with others outside their own circle appears anathema.

Insofar as Apfa has campaigning and committed grassroots representatives like Neil Liversidge, they tend to be left isolated by their central leaders, largely through a lack of resources.

Then there is Garry Heath’s Libertatem, a body stranded in 1980s and 1990s nostalgia rather than credible forward-looking politics. How else does one describe a call from Garry for a return to commission payments for advisers?

Or his more recent proposal for an old-school Fimbra-style regulator for advisers. Who knows, maybe Garry has even lined up former Fimbra chief executive Godfrey Jillings, still a mere stripling at 75 and surely ready for at least another decade’s worth of herding cats, as he once described to me his experience of dealing with advisers.

No, if such a merger, combining the best of life insurance, mortgage broking and – why not? – general insurance representation is to take place, it needs a professional body to take the lead in bringing together all different strands in the industry. The Institute of Financial Planning has its own merger with the Chartered Institute for Securities & Investment to contend with, although it could play a part in future if it wished.

Step forward the Personal Finance Society and the Chartered Insurance Institute, which between them represent tens of thousands of grassroots members across the UK. The two are intertwined with each other and their primary focus has always been to promote training and the chartered qualification. But both have a commitment to ethical standards and a desire, albeit flawed, to engage with consumers.

If they were to extend their mission statements to include trade body-style representation for their members, a joint PFS/CII could act as the central hub around which it might be possible for individuals from other organisations to coalesce, including Apfa, the Association of Mortgage Intermediaries and, potentially, even Biba, which represents insurance brokers.

It is time for one united body both to assert the professional status of the many thousands of advisers and brokers in the financial services industry and to represent them effectively. If it’s good enough for the banks…

Nic Cicutti can be contacted at


CML and BBA urged to join forces in mega-merger

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There are 9 comments at the moment, we would love to hear your opinion too.

  1. Ah NIc

    You have been daydreaming again. (Or on the ganja or bottle).

    Your paragraph: “There are also clearly some strong personalities involved” is part of the clue. The other is how aligned are the interests of a Libertatem (what un unwieldy title) member and a Chartered member of CISI or indeed the PFS? Yes I know there is a difference in our neck of the woods between a trade body and a professional body, but this seems a unique aberration in the financial advice sector.

    So the brief answer to your headline is: no.

  2. I may be wrong, but was it not Neil Liversidge (in his recent article on these very pages) not Garry Heath who suggested a return to commission?

  3. Nic: I am getting heartily sick of you attempting to misrepresent my views and attributing ambitions to Libertatem that it does not have. You have never had the common decency to pick up the phone and find out the reality and I don’t expect that call anytime soon. Why destroy a good storyline with the facts – eh Nic?.

    Advisers are currently facing regulatory costs growing at 40% compound per year. Some firms are seeing 25% of their turnover going in these costs and it will only get worse.

    So what’s the solution? We could try and reform the 3 Fs but I believe they are too compromised to be reformable. Alternatively we could create a lower cost alternative to the FCA for a sector which has for generations demonstrated a far smaller risk to the consumer.

    That’s not going back to FIMBRA: that’s going forward to a new regulatory system that adviser’s clients can afford. There is no benefit to advisers or their clients to be jammed into a regulator which competes with City banks for salaries and is accountable to no one. “If its good enough for the banks Nic” – it isn’t anywhere that promote their advisers’ reputation.

    But its all academic. Advisers appear to have given up on their futures. There is little point in uniting what exists with the majority of advisers sitting outside the existing bodies freeloading. Unless the advisers are willing to take their futures seriously why should anyone else?

    Despite all the fee based advice and the increased professionalism – for too many one adviser trait still remains. The expectation of someone else doing the paying.

    Those who disagree with this can demonstrate their independence by contributing to our Fighting Fund

  4. Ah Julian,

    Today the word ‘commission’ has the same ring to it as ‘Nosferatu’

  5. I didn’t suggest a return to commission that may well have been Neil. I did suggest that if we were to continue to advise transactional clients that a scheme had to be created that allowed them to pay for their advice over a period and that was “free” at the time of need – a bit like the NHS

  6. Never feed a troll, is an iron rule of the interweb. Hence I rarely comment on NC’s stuff, unless asked to do. I am not concerned with what the BBA et al do with their trade associations – that’s for them. I am concerned with the representation for advisers – both as regards professional bodies and trade associations.
    To date none, not one, of the professional bodies has actually ever made any real attempt that I can recall of innovation at all in respect of a unified or even vaguely sensible trade body. Mostly they seem to have been happy to rent seek from the qualifications agenda of the FCA et al. Maybe they have been staffed by the same character of bureaucrat. Who knows? Who cares?
    APFA, which may I remind you grew out of the IFAA – built up and run very successfully by Garry Heath – has become reverse regulatory captured – captured by the regulationists. I like Chris Hannant a lot but I do not think he has the aggression, independence of mind and gravitas necessary to really carry the fight forward. This is not a criticism, it’s an observation. Others may disagree.
    On the other hand GH, and the organisations he has run, have a track record in providing robust argument in favour of advisers and their clients. This is in large part a mind set thing. You have to be prepared – both as in ready to and as in informed to – take on the largely failed regulatory state. NC just demonstrates more ignorance by dismissing the return of commission (actually it has never gone away) as it is entirely for individuals to decide in a free society as to how they relate – the sanctity of private contract thing. And of the trade associations (and the professional bodies) out there, Libertatem is the only one coming up with some original thinking. Everyone else remains in thrall to the regulationist interventionist agenda. Trouble is, the messes we see, are largely the result of the failure of those same regulationists. (The 2008 banking failures were not market failures. That was markets finally succeeding and passing an accurate judgement on the compounding failures of the interventionists – and bad money, of course. )

    Hence NC dismissal of GH and Libertatem is juvenile.

  7. Gary

    “Despite all the fee based advice and the increased professionalism – for too many one adviser trait still remains. The expectation of someone else doing the paying.
    Those who disagree with this can demonstrate their independence by contributing …”

    That’s a little unfair. Some may well feel that your organisation is not for them. Indeed they could well be demonstrating their independence by NOT joining or contributing.

    This whole debate is (as you know only too well) a very old saw indeed. Trade bodies have been struggling for years. The LIA was swallowed by the CII. NFIFA subsumed into AIFA and that died with the RDR. Gill Cardy had a go and collapsed fairly quickly.

    On the other hand professional bodies have prospered – to an extent. the CII spawned SOFA who begat the PFS. IFS seems to roll along quite nicely and the IFP had the huge good sense to run into the arms of CISI. Every adviser HAS to belong to a professional body – if only for the SPS. (And of course pay). They don’t HAVE to join a trade body. Some actually just ‘assume the position’ and get on with business – or take the trouble to engage directly with the bureaucrats.

    Finally it is perhaps worth considering that the high hurdles of this burgeoning profession do to some extent protect the existing practitioners. So you could actually see a glass half full.

    Oh, and if you don’t mind me saying – ranting at a journalist can be self defeating. Come on Gary, you have been through the bellicose stage, perhaps it’s time to try a little diplomacy?

  8. Aren’t member subscriptions supposed to be the ‘fighting fund’?

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