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Neil Liversidge: Stop whining about Apfa’s restricted members


Around the turn of the millennium I sat in a hall at the Leeds Armouries listening to a senior Misys executive lecturing DBS members on how the network model was the only future. He posited that the regulator did not want small directly authorised firms cluttering up the landscape “thinking they can fly below the radar”. Fifteen years on, the small firm model has suffered all the slings and arrows of outrageous regulation yet despite it all is looking surprisingly healthy. DBS, however, became Sesame. Some say the network model is dead. The networks obviously disagree. Network membership is not for me but if they can survive and thrive then good luck to them. What I cannot get my head around is the pointless posturing and blatant falsehoods parroted about networks by individuals who were, until recently, members of Apfa’s governing council.

Two main myths are propagated. The first is that the networks call all the shots and the rest of the council have to like it or lump it. I have served on Apfa’s council for nearly five years now and can categorically state this is simply not true. Not once in five years has there been a split vote on any issue we have debated. Not once have the small and medium sized firm representatives ever been put under pressure to fall into line behind any network’s stance. On the contrary: the small firms have succeeded more than once in pulling the networks onto their side of the argument, most notably in the recent debate over capital adequacy.

The other myth is that Apfa, as one former council member declared with hilarious pomposity, had “betrayed IFAs’ birthright” when it agreed to accept restricted firms. This argument confuses the competition with the enemy. The enemy is bad, expensive, unrealistic and unaccountable regulation. The enemy is the gullibility of the Financial Ombudsman Service and its propensity to stuff claimants’ mouths with other people’s money. The enemy is a compensation scheme that does likewise. Restricted firms are just competition. Those who worry about them being represented by Apfa need to stop whining and concentrate on being better businessmen.

So what is the reality? No honest person would deny the departure of Sesame and Openwork has impacted negatively on Apfa’s finances. But while the former was inevitable the latter will, I believe, prove to be a mistake. If any firm thinks it can have more clout lobbying solely in its own interests than Apfa can when lobbying for the whole industry then it is deluded.

So, where now for Apfa? I believe small firms, in or out of networks, are the sustainable future of both the industry and Apfa. The networks accepted long ago their members could join Apfa direct and be represented via the small firms’ constituency. If enough join, the small firm representatives will swamp the networks anyway. However, one thing above all is clear to me: if Apfa in its present form did not exist then we would need to invent it. Garry Heath and his supporters would say he has. Sadly, in that regard, they are also among the ranks of the deluded.

Neil Liversidge is managing director of West Riding Personal Financial Solutions 



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There are 11 comments at the moment, we would love to hear your opinion too.

  1. To be fair to you and APFA Neil its not you and how you take in restricted advisers; its the FCA’s stupid description and interpretation of indy and restricted !

  2. Neil Liversidge 12th June 2015 at 4:17 pm

    DH you are absolutely right. I personally took up that issue, supported by the entire APFA Council. The point has been made and will continue to be made because really the FCA’s position is both illogical and indefensible. (And I’m 100% independent in case anyone was wondering!)

  3. As ever our experiences give us different versions of what we consider to be the facts.

    I too was on AIFAs council for about 6 years; as is known I resigned when it became APFA because of the broken promise to have a collegiate approach. I had no problem with a collegiate approach, as both sectors could then have been confident of no conflict when it came to particular issues.

    But guess what – the Networks and the big boys were dead against it and squashed it. So that’s two examples straight off that contradict you.
    1. There are still those who want to differentiate the Independent sector. I agree that some of the regulatory detail may be inept, but we are where we are.

    2. This is just one example of the Networks holding sway. I don’t want to embarrass you too much by quoting instances before your time on the council and no doubt you may say that was in AIFAs time and not the case with APFA, but personally I don’t think that flies.

    Of course the most obvious example of network and large group influence is the disgraceful disparity in the charging structure.

    I’m afraid that in this case the Gentleman doth protest too much.

  4. A good article, Neil, with which I agree almost entirely. However, may I take issue with you on two points:-

    1. “No honest person would deny the departure of Sesame and Openwork has impacted negatively on Apfa’s finances”. Isn’t that pretty much exactly what Chris Hannant tried to do?

    2. I have long considered the FCA’s treatment of networks as if they’re large nationals to be both wrong and unreasonable. Rather, networks are collectives of (mostly) small firms who, by choice, subscribe to a range of centralised and frequently valuable support services, not least compliance. My view (FWIW) is that APFA should be campaigning for the FCA to adopt a more realistic and fairer view on this. Given that all the firms within networks are much easier and therefore cheaper for the FCA to regulate by proxy, network members should be subject to lower FCA levies than our DA counterparts. We’re paying a slice of our turnovers to an organisation of our choosing that, in theory at least, should help us to comply better with the FCA’ rules.

    I would be interested to know how the ever diminishing proportion of complaints against regulated intermediaries is divided between network members and DA firms. That’s not to say there aren’t many very good DA firms out there but there are also probably quite a few not so good ones whose standards are less good than they would be were they subject to the levels of QC to which they’d be subject were they members of a network.

  5. Christopher Petrie 15th June 2015 at 12:26 pm

    Sorry Julian but you are an Appointed Representative of your network. That means just that…you represent your Network and make recommendations along the lines they tell you to.

    For all practical purposes, Networks and Nationals are now the same thing. Especially where the CIP is a Restricted version.

    For those who don’t wish to be a rep…they should go DA.

  6. Neil Liversidge 15th June 2015 at 12:54 pm

    Having worked for what was at the time the largest network – DBS – I can tell you quite frankly that one of the biggest problems it had in compliance terms was that of members saying “I don’t pay my fees for DBS to tell me what to do – I’ll sell what I like.” At the time there wasn’t much appetite to ‘get heavy’ with those who took that view. I’m reliably informed that other networks had the same problem. The net result was that they ended up with some very large liabilities and fines. So you can understand why it is that networks now keep their ARs on a much shorter leash. I experienced the same in microcosm. Another IFA wanted to work through my firm as an AR but pretty much wanted to do as he liked, whereby I would have picked up the liability of course. So obviously I said “no thanks!” He’s now joined a network. I think the reality is that if you do operate via a network you will have to accept being very restricted as to what you do, and operate within much narrower boundaries. Which, really, is fair enough when the network is carrying the can.

  7. I don’t have to make recommendations along the lines they (my network) tells me to and nor do I represent anyone but myself. Yes, my network, in strictly regulatory terms, is responsible for everything I do but the bottom line is that if I screw up and a client has to be compensated, anything not covered by the PII is my responsibility. You’ve obviously never been a member of a network. Here’s how it works:-

    Unless I can produce a sufficiently convincing argument for recommending a product (or indeed any fund) that’s not on my network’s approved panel (which, in practice, is virtually bloody impossible and, admittedly, a source of considerable resentment amongst many member firms), I have to abide by said panel. For their part, the network will argue that everything on its panel has been thoroughly researched, analysed and cross-referenced to other research agencies (due diligence, about which the FCA is forever harping on) and is therefore as safe a proposition as it can reasonably be judged to be.

    A benefit of this is that I’m steered away from products or funds that may superficially look attractive and sound but, upon further investigation (which would take time and money), turn out to be anything but. I’ve never recommended ArchCru, Life Settlement funds, Connaught, any UCI Scheme or anything else that’s gone horribly sour and resulted in many small DA firms being obliterated.

    My write-ups of my recommendations have to tick all the (metaphorical) boxes to ensure that they’re as fire-proof as possible against future challenge, which sometimes requires going somewhat OTT but, in the end, it’s for my protection as well as that of the network.

    I don’t have to spend time renewing my PII every year, I don’t have to do any of those damned useless RMA Returns for the FCA and I don’t receive any “invites” to local FCA events at which people like Rory Percival seem to manage to convince everyone of what a jolly good fellow he really is.

    Being a member of a network isn’t perfect but, judging by the constant flow of DA firms joining networks, the grass isn’t uniformly greener on the other side of the fence and I suggest that it’s perhaps a bit mendacious to claim that it is.

  8. Christopher Petrie 15th June 2015 at 3:48 pm

    Each to their own of course. I was Network member when first starting my IFA practice, but realised after a while that I was able and confident enough to go DA.

    RMAR and PI forms ard a bore but you soon get the hang of them. They are absolutely no reason just to stay in a network.

    Being DA means I can – on rare occassions – arrange a VCT or EIS when it s entirely appropriate. I take the decision and risk. Also, I NEVER need to give a client 97 pages of gumph to arrange an ISA as JS has so often moaned about.

    Oh, and I no longer pay 10’s of thousands a year to a Network, nor do I sign them personal guarantees, so my retirement will mean no future concerns (not that I have any in any case).

  9. The problem APFA has in the eyes of the very many disaffected IFA’s I hear from each week is that it has not appeared to engage with its membership over a number of very important years on issues of vital importance to the membership, the industry and ultimately the consumer.

    The past leaderships have ploughed an often poorly consulted furrough with little or no understanding of what the root and branch membership either wants or stands for. That needs changing I believe but I would suspect not quickly enough for many.

    To set up a new trade body is not an easy task. I did not see that setting up another body solely for “Independent” financial advisers had any merit and it was never likely to gain sufficient funding support beyond an initial wave of euphoria to achieve any long-term credibility.

    The adviser community needs to look at what it wants a trade body to do.

    Is it to act as a centralisation of views and opinion in order to see fair play by way of consensus in the formation of a regulatory framework and the impact it has on its membership, or is it to see the protection of the word “Independent?

    After all restricted advice to the masses could turn out to be more acceptable than thought, both to the consumer and advisers alike.

    If it is to protect the word ‘Independent’ is that not better achieved by way of relationships with IFAP or via the CII in the ‘Professions’ makeover underway with the RDR process?

    As restricted and independent advisers are all subject to the same regulatory constraints and controls, and to a great degree share the same ideals (that of ensuring their clients get the best possible service and advice relevant to their aims, aspirations and circumstances) surely strength can found in the broad church model rather than creating a sect like representation that will never get heard with any degree of seriousness.

    Linked with this conundrum is the fact that advice can be independent in the restricted model as the restriction is by way of what you want to advise upon by way of qualification. Are those HNW Wealth Architects restricted if they choose not to be involved with the Protection or Mortgage market?

    So that brings us to the thorny question of trade body or trade union. The latter in society today does not carry the clout of pre-Thatcher years but unions still have the capacity to bring normal life to a standstill.

    Professions do not make easy bedfellows with this ideal and I suspect IFAs would feel uneasy at being represented by a trade union and unwilling to get involved with mass protest.

    Despite many IFAs feeling rightly aggrieved with the seemingly undefended imposition of regulatory change and huge cost, I cannot see that a cry of “Everybody out” will garner too much support from the industry or consumers.

    The sight of IFAs huddled around braziers in high streets up and down the land would not do the credibility image too much good.

    So, where should advisers go in search for the Grail of strong and united representation if APFA is not doing the trick?

    Well, Libertatem, the ‘Magna Carta’ inspired trade body just set up by Garry Heath, former Director General of The IFA Association, to represent financial advisers, both independent and restricted, planners and wealth managers across the UK may tick the right boxes.

    The new association, according to Garry aims to be a clearer voice for adviser firms, ensure the survival of a strong advisory sector, create an effective trade association fit for the 21st century, create a democratic structure that will seek to represent the widest numbers and types of advisers in a proactive and positive way and more.

    I am sure Garry would welcome a call for a chat!

  10. Julian
    I have just read your post 3 times and to me it seems a perfect explanation of why you are not independent. If you think that adhering to those constraints sill makes you independent, then you certaily seem to be miguided.
    The very simple satement on your business card to me is telling. JS Appointed rep of …

  11. We have given our sacrifices to the Gods of Google and at long last the new Libertatem website is working at

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