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Nic Cicutti: Aifa turning into modern variant of LIA

A few weeks ago, when writing a column about Neil Liversidge and his “open letter debate” with Radio 4’s Money Box presenter Paul Lewis, I praised him for the trenchancy with which he defends the IFA corner.

Neil, I wrote, “is one of the few Aifa representatives with any credibility among rank-and-file advisers. The danger is that he might end up as a tame John Prescott, playing warm-up man to Aifa’s Tony Blair. Thankfully, there is no evidence of that, so far.”

After writing that column, a few readers contacted me to say there was no likelihood of Liversidge becoming like Prescott. One email, which I kept, said: “To compare Neil with ’Two Jags’, who sucked up to Blair while grabbing almost every privilege going, including a Lordship, is completely wrong. He will never sell out for anyone or anything.”

I realised then that my description of a potential comparison between Neil and Prescott had not been expressed subtly enough.

The Prescott I was referring to was not the vain man who lived in a grace-and-favour house rented to him by the RMT union at a fifth of its market value while enjoying a separate pad at Admiralty House and a weekend mansion at Dorneywood, where he was famously pictured playing croquet.

No, it was the Prescott of the mid-1990s, who stood for leader of the Labour party, was instead elected as deputy to Tony Blair and went on immediately to prove his worth by backing all of Blair’s “reforms”.

In this, he acted effectively as a cover for Blair with the trade unions, of which he had been a staunch member all his life. It was Prescott’s credibility as a former militant shop steward that allowed Blair a much easier ride with the brothers and sisters.

And it was this Prescott, who at that time had no dream of privilege in mind when he backed Blair down the line, whom I felt Neil Liversidge was in danger of becoming.

Barely six weeks later, I find myself wondering if prophecy is beginning to come through sooner than I thought.

Last week, Money Marketing put Neil and Gill Cardy together, to debate the necessity or otherwise of a new trade body to defend the interests of IFAs. Let’s leave Gill’s argument to one side for a minute – it is Neil’s that interests me.

What he says, and it is a mantra that has emanated almost word for word from the bosom of Austin Friars House for some months, is that just because the FSA has “moved the goalposts” by insisting on a redefinition of what constitutes “independence” does not mean that the trade body itself should.

For this reason, Aifa’s decision to recruit members who will belong to the “restricted” category of adviser on January 1, 2013 is entirely appropriate.
There are two problems with this approach. The first point to note is that Aifa itself is now moving the goalposts, not just the FSA.

Whereas in the past, it would never have occurred to a trade body for independent advisers to recruit all and sundry to its ranks, regardless of their status, Aifa will clearly be able to do so in just over a year’s time.

That is not just about allowing a few members who still want to earn a crust by being paid commission to stay within the organisation but opening your doors to anyone who wants to join.

Ironically, in doing so, Aifa is turning itself into a modern variant of the LIA, which saw no problem with allowing anyone to be a member, something the old Nfifa was bitterly opposed to many years ago

The second issue worth noting is that any representational body reflects a reality on the ground. Nfifa was set up because the Financial Services Act of 1986 created a body of advisers whose role was clearly defined and whose representational needs were seen as different from other sections in the financial services industry.

If, therefore, an IFA is being newly defined by the FSA by reference to remuneration, among other aspects, then surely the central issue is that of assessing whether the representational needs of that new independent sector are sufficiently different from other salespeople to warrant a separate organisation. If the verdict is yes, then Aifa should stick to its knitting.

Of course, that is not why Aifa is moving its own goalposts is it? I recently read a long anguished interview with Aifa director general Stephen Gay in which he bemoaned the fact that, compared with organisations such as the ABI or IMA, his own trade body’s staffing levels were minuscule and insufficient to the task.

The message, therefore, appears to be – if the apparatus is not large enough for Gay and the rest of Aifa council or is in the remotest danger of shrinking in the light of the new FSA requirements to be introduced after 2012, open the doors to anyone who wants to join – the extra money will come in handy.

And if some members question how genuine IFAs might end up being completely marginalised by an organisation that once used to represent their needs exclusively, wheel out a well respected arch-IFA to tell them there’s nothing to fear.

You tell me that’s not like John Prescott.

Nic Cicutti can be contacted at nic@inspiredmoney.co.uk

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  1. The answer to the question Where have the goalposts gone? is simple. The FSA confiscated them several years ago. Merely moving them all the time just wasn’t good enough.

  2. Neil F Liversidge 11th November 2011 at 1:48 pm

    I guess this was meant to provoke me to the kind of fury that you love to generate from other IFAs on a regular basis. In reality I fell about laughing. Here’s the reality: The way it looks at the moment we might be defined as ‘restricted’ if we don’t offer our clients esoteric risky unregulated products and maybe even overseas products for which they have no appetite whatsoever. From the FSA’s other recent emanations there are also various other reasons they might find to categorise us as restricted. Still nothing seems to have solidified however, though it does look as though restricted advisers will also be banned from taking commission as will be independents. The only thing that does appear reasonably certain is that the FSA wants as few as possible to bear the ‘independent’ tag. (Probably nobody if the FSA suddenly fell ill with a dose of honesty, or am I being too cynical?) On that basis we can let the FSA define our constituency and end up like the wee wee frees who split from the wee frees up in Scotland when Lord Mackay had his fall-out, or we can be pragmatic and practical. Guess which I’m going for? I suppose we could take the militant line and exclude ourselves out of existence but at the end of the day it’s what you achieve that counts.

    Going back to the Prescott analogy, I have long found it hilariously ironic that, given the generally right-wing complexion of the adviser community, its internal politics so much ape those of the far left. Seldom does a week pass now without a denunciation of AIFA by a would-be competitor. What a waste. At a time when a popular front against over-regulation was never more needed, there are those in the IFA industry who would rather shoot at their own friends and justify it by casting them as traitors. When the FSA’s definition of ‘Independent’ finally crystallises – and it’s still not certain where the line will be drawn – many who consider themselves independent and who have no plans to change their business model may well find themselves on the ‘restricted’ side of the border. I may even be amongst them; though I know of nobody in the industry more firmly in the IFA camp. Will all us ‘old Bolsheviks’ then be purged by those we formerly thought our comrades?

    As a historian I cannot but help recall how the Stalinists and Trotskyites spent as much time fighting each other in Spain as they spent fighting Franco’s fascists. Here in the UK of course, whilst the left never got around to actually killing each other, they were never short of vitriol with which to denounce each other. The fact is though that, however much the defunct Communist Party, the Socialist Workers, Workers Revolution and the rest reviled the Labour Party, none of them created the NHS. The old Marxist belief that ‘soft left’ social democratic parties would be supplanted from the left, as the workers realised they had been betrayed, also finds its echo in the polemics of AIFA’s detractors. Do they really think destroying AIFA can bring a more effective force into being?

    If anyone wants to know what AIFA is really about then all you need do is talk to us. You can talk to AIFA’s officers or you’re welcome to phone me; my contact details are on the FSA website. AIFA is not a cliquey secret-squirrel club but a practical and open organisation doing its best with the meagre resources it has. It is open to all shades of opinion in the IFA sector and it needs all of you to play an active and constructive part by adding your views and your intellect. To that end, to Comrades Cardy, Lakey and the rest, I say “take a break, read some George Orwell, and when you’ve learned where the path of internecine strife leads, come back and join AIFA. We can work together, the door is open and you will be very welcome.”

    To Nic on the other hand I say ‘Congratulations on running the classic set-up and-knock-down play’. You executed it brilliantly. ‘Last week Neil’s a hero, this week Neil’s a traitor’. Yeah, right. But because we’ve seen it all before it impressed nobody. Have a nice day.

  3. Neil Liversidge,
    The way you spoke to me this morning, when I rang to ask why in November 2009 AIFA promised to pursue a judicial review if the FSA did not listen to to them regarding level 4 qualifications (MM November 2009) was a disgrace. First you tell me that AIFA would not have said that , then you went on to shout at me and abuse me because I am not a member and im waisting your time, finally telling me to “get my $@@%ing money out my pocket and pay my dues” before hanging up on me. Real professional that was Mr Liversidge. To say that my conversation was like one I may have with our local yob is being unkind to the local yob. No wonder AIFA is almost dead on its feet and members are leaving in droves. I was open to join this morning had I had a decent conversationwith the man, now never ever!!
    Nic Likening AIFA to the LIA is extreamly disrespecful lto the LIA.

  4. Neil F Liversidge 11th November 2011 at 4:41 pm

    Richard, your version of events above is as warped as your logic when you phoned me. I am starting to see that the regulator has a point about the ability of some advisers. You think that AIFA should run a judicial review when it has no money to fund one. How financially responsible would that be? I would not like to be a client of yours if you advise them to take on debt and risk so recklessly and with such little consideration as to their wherewithal and the likely results. This morning you saw fit to phone me and rant on about a promise AIFA supposedly made two years ago before I joined the Council. Apparently you have a problem passing level 4 and you want AIFA to spend its money on a legal challenge. When I asked if you were an AIFA member you admitted – after being asked several times – that you weren’t. You said you would not pay a penny to AIFA calling it useless and making disparaging and insulting references to the individuals running it. However you still felt entitled to take up my time with your unsolicited call to rant at length, hence my termination of the ‘discussion’. I was elected to represent small firms, which I do, and I think my colleagues on the AIFA Council would admit that I do so forcefully, albeit I am both a realist and a pragmatist. You told me that you are a member of Lighthouse. Malcolm Streatfield represents Lighthouse and the networks on the AIFA Council and did so long before I was elected. If you have a problem therefore, with what AIFA was doing two years ago, then it would seem to me that it is he you should be ringing. For the record I treat polite and reasonable callers in the same manner, but pontificating ranters get short shrift. I am not sitting in a coconut shy for anyone to throw rocks at, and anyone who tries had better duck quick when I throw them back.

  5. Did I not read that AIFA made a loss of some £200,000? And now one of its directors wants to lecture someone else about “financial responsibility”

    Ironic or what?

  6. Should we not be debating the fundamental issue here which is why the regulator sees fit to dictate its own definition of “Independent”?

    Or how it can stop specialists in say pensions, protection or investments who are WOMBLIES (FSA speak for whole of market) in a particular area from calling themsleves “Independent”.

  7. Neil F Liversidge 11th November 2011 at 5:28 pm

    @ Nick Bamford – Wow! That’s about as cheap a shot as cheap gets. I didn’t expect that from such a ‘giant’ of the industry, but one lives and learns. For my part I joined the Council a year ago and I happily accept collective responsibility for what is within my control and for what I have been able to do personally in the last year. otherwise I don’t intend discoursing on here re’ AIFA’s finances. I can say though that my conscience is completely clear.

    @ NIc Cicutti – Another thought occurs to me Nic. Shortly after my election to AIFA in 2010 you wrote a piece which prompted me to invite you to meet with me and find out the reality of what I’m about. I suggested it a couple of times as I recall, but you found excuses not to bother. I have it on good authority also, Nic, that you have been invited along to AIFA HQ, but you haven’t bothered to take up that invite either.

    It strikes me as a lazy approach to journalism to base articles on ill informed assumptions. At least if you did come along to talk to us you could still write up your warped version of the truth and back it up by claiming to have at least done SOME research.

    I have nothing to hide and neither has AIFA. We’re doing our job the best we can with the resources we have, including those resources we devote to research. How’s your research these days Nic?

    And yours, Nick?

  8. Ill keep this short.
    A. as for my clients 28 years should speak for itself.
    B. As for exams , mine is in about 3 weeks having completed my study.
    C. I have listend to our conversation again and in fact my version isnt “warped” at all its very accurate.
    D. I didnt ask you to pursue a judicial review at all, in fact Im surprised you can remember anything I said because all you did was talk over me, I asked why AIFA had not kept its promise of two years ago to pursue one. It wasnt a personal attack and whether or not you were on the council at that time I thought you could have given me the answer.
    I WAS considering joining,however I now consider the matter closed as is my wallet as far as AIFA membership is concearned

  9. So let’s get this straight Richard. You’re represnted by your networks boss but you didn’t phone him. You were supposedly ‘thinking of joining’ but you’re not actually an AIFA member. (How many times have we heard that?) You did phone somebody who represents quite another AIFA constituency – small firms – when he was doing his day job, and you gave him a hard time about something AIFA did before he was elected. In the same circumstances I’d have told you where to go. I think you should concentrate on passing your exams.

  10. @Neil Liversidge

    I am not a giant I am 6ft 2inches

    If you don’t want “cheap shots” then don’t line them up so easily

    Still I guess having a sense of humour and being an AIFA Director don’t have to be mutually exclusive unless you choose to make them so

  11. AIFA, LIA, FSA, FCA, who cares anymore, the IFA sector will inexorably move to diminish and eventually disappear once the manure hits the fan because if the expected numbers of older IFAs leave, now looking like 20-30% over the next 2 yrs, I cannot imagine anyone wanting to take on a lifetime complaint liability, give up their rights under HRA and surrender all control of their business to a regulatory body which does not give a toss whether you survive and prosper or not. They have demonstrated a complete and utter disregard for the views of our sector and blatantly compromised the rights of consumers to have a choice of payment methods, ensuring the majority of lower and middle income consumers will no longer be able to get affordable advice and be directed towards the direct and banking service providers.

    If the “gentemen” in this blog, who put forward different versions of the same conversation could maybe moderate their vitriol and open their eyes, the truth is that AIFA is an irrelevance and has not achieved any changes to the RDR timetable and as one erstwhile commentator stated an operating loss of £200,000 should not encourage any self respecting solvent IFA to join them.

    I lay the blame for this mess, not on AIFAs table, but at the tables of all the heads of networks who cravenly kow towed to the FSA by not standing up and objecting to what will be the death knell of the iFA sector as we know and love it.

    Our forefathers fought wars and died for the right to remain free men and women and determine our own future, I for one, if I do not achieve the no doubt laudible level 4 before the end of 2012 (I am after all a bit slower than I used to be on the uptake at age 62) I will just walk away from all my wonderful clients and use my woodturning skills to flog stuff on ebay. Probably make more money as well.

    The world in on the brink of economic collapse due to the Eurozone and other worldwide crises, profits in our businesses will dramatically reduce once the commission ban comes in and Sants and crew will have departed for pastures more lucrative once the FSA closes down and leaves us with this mess.

    With all due respect to Neil and other bloggers, we are well and truly stuffed.

    The lunatics are running the asylum.

  12. In all my years in the industry I do not think that I have seen a series of comments which do less credit to the IFA community than the above. Shameful.

  13. Neil F Liversidge 14th November 2011 at 1:32 pm

    Everyone said something should be done.
    Anyone could have done it.
    But nobody did it.
    So it didn’t get done.

    Ever since RDR was first mooted the IFA community has been fulminating, and with very good cause in many respects.

    Some of us have lobbied on it from day one, outside AIFA at first, in my case, and more latterly via AIFA, because after logical consideration it seemed to me to be the most likely organisation to achieve something useful. It still does.

    Others have confined their ‘efforts’ to blogging, much of it unconstructively. AIFA has come in for as much criticism as the RDR and the FSA itself. Most of the critics have never been AIFA members however and are completely ignorant of the thousands of hours of work that AIFA has but in on IFAs’ behalf, both by the paid staff and those of us who are unpaid volunteer directors.

    Ever since Level 4 was defined as the future legal requirement I have heard dozens if not hundreds of IFAs demanding that ‘somebody’ – that mythical ‘somebody’ with bottomless pockets – mounts a legal challenge via a judicial review.

    However while the demands have been manifold, the number of people actually willing to put their hands in their pockets to fund it has been minimal. And actually I’m not surprised. A judicial review would not have a cat in hell’s chance. I may not be a lawyer but I know enough about the law and governmental processes to know that much. (The lawyers may think otherwise of course, but they get their fees win lose or draw.)

    So do I think a judicial review should be launched? No. Have I ever thought so? No. Have I ever said I favour one or encouraged anyone to spend money on one? No. Would I ever? As things stand, no. What do I think of those who are so quick to call me a traitor because I refuse to waste other people’s money and lead them down the garden path? Ridiculous braggadocio.

    I fight to win. Part of winning is choosing one’s ground and one’s moment carefully. I’m not into Light Brigade style charges that accrue glory to the leader at the expense of slaughtering the troops.

    I am in AIFA because I think it offers by far the best chance of achieving something meaningful for the IFA community as it currently stands. If I thought Alan Lakey or Gill Cardy offered a better chance I’d join them. If it turns out that I’m wrong then Alan and/or Gill will be highly successful, thousands will flock to their banner, they’ll all contribute generously and there’ll be all the funding a trade body could ever need. I’ll also be very happy to join myself; I wish them nothing but well and essentially we are all singing from the same song sheet.

    In reality though I think they will both find that whilst many are keen to egg them on, they are nowhere near as keen to contribute financially.

    At the end of the day folks, it’s pretty simple. You get the quality and quantity of representation that you are prepared to pay for, so if you don’t like what you have, or what you don’t have, who else is to blame?

    I blog like you all blog, but I also pay my dues in time and money. Whatever you think of it, I’m doing something. You?

  14. Never has an ill aimed Cicutti broadside caused so much damage.

  15. IFAs did not fund NFIFA, and do not fund AIFA. IFA trade associations have always been dependent on product provider finance.

    Assuming that a substantial number of independents survive RDR as independents, they can take the moral high ground by showing that they are on the side of the consumer.

    But to take the moral high ground they really do have to be independent. In other words, enough of them have to cough up to establish a small but professionally run association.

  16. If I simply change the name on this post Neil F Liversidge | 14 Nov 2011 1:32 pm it outlines my thoughts. I joined, then left AIFA on a principle to make a point (I don’t know if I did or it worked) and have since rejoined AIFA as whilst I also contribute to Adviser Alliance and respect Gill Cardy’s opinions immensley. I don’t think either will have critical mass for anything other than individual areas (Longstop for instance being where AA will make the difference I think and not AIFA).
    Being willing to lead from the front and loose everything is one thing (i.e. use your own money), but leading from the back and expecting OPM to fund it is doomed. That is what the F pack has done i.e. use OTHER PEOPLEs MONEY and thast is in part why they have been doomed. The Phoenixing simply means we need to make sure that those responsible for serious errors with OPM are held to account. For that reason I am pleased that it is on video record that Andrew Tyrie interogated Hector Sants on reckless stupidity. No kinghthood for him if it is proven he was reckless.
    As to the spat between Nick Bamford and Neil. They have just proven between them why I keep banging on about the CII’s code of ethics as one or both of them have breached it in my opinion.
    But then I am not a membr of the CII so I can choose to be publicley critical of CI/PFS members without risking having my SPS removed. (Read your CII terms and you”ll see it does allow for it to be removed if you bring the CII in to disrepute and hence as membership of th CII is mandatory to obtain an SPS from them and is required to trade by the FSA why I argue the whole RDR has very serious ethical as well as legal flaws, that the individual needs to consider fighting as a test case rather than exepcting someone else (AIFA) to do it for them.

  17. Please see – http://www.cii.co.uk/downloaddata/Code_of_Ethics.pdf

    Extract – The Code sets down the principles which all members should follow in the course of their professional duties.

    2.2 being reliable, dependable
    and respectful;

    2.4 not bringing the financial services
    industry or the CII into disrepute
    whether through your

    • How would my actions look to the CII?

    5.4 always acting openly and fairly and
    treating employers, employees,
    colleagues, clients, potential clients
    and suppliers with equal respect
    and opportunity;

    NOW I don’t profess to do any of this, but then I have not signed anything (recently) to say I will do any of this. I suspect many of you have……

  18. Unlike Nic I have the highest regard for Neil Liversidge and were the AIFA council made up of Neil Liversidges I would certainly join.

    AIFA’s real problem is that it has alienated so many advisers with its lacklustre performance and its tacit support for the RDR experiment that they are choosing to steer clear or jump ship.

    I recall a conversation with a certain Chris Cummings in 2008 where he told me that AIFA had a war chest for three Judicial Reviews. He hinted that they would be sending out the cavalry to head off a number of imminent threats. Instead we had Dads Army puffing along and then asking Mr Hitler how far over they should bend.

    I do wonder whether there is any hope for an industry that is being systematically dismantled by here today gone tomorrow careerists who will never face the blame for their stupidity.

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