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 firstname.lastname@example.org