Are financial services trade bodies locked in a death spiral, unable to resolve a conflicting challenge of whether to advance the interests of consumers or members? That was the question asked last week by Money Marketing, which examined the difficulties faced by a number of bodies in the industry, including the Association of British Insurers, the National Association of Pension Funds and the Investment Association.
MM reporters Valentina Romeo and Sam Brodbeck spoke to experts and the consensus appeared to be that the so-called Big Three – or is it the Big Four? – have reached a “turning point” and “must act quickly” if they are to survive.
As someone with a long-term interest in the representation sphere, as well as having written about the industry’s trade bodies for more than 20 years, perhaps I might be allowed to declare an interest.
About 35 years ago, I attended a Trade Union Congress conference as a delegate of CoHSE, a mid-sized health union with a membership based largely round large mental health and learning disability hospitals. CoHSE’s aim had long been that of uniting all NHS health workers under one union umbrella. But the truth was most of our thunder had already been stolen by other unions like Nupe, who presented themselves as more militant and were nimbler at recruiting members.
Also at that conference were members of the stevedore’s union NASD. In the mid- to late 19th century stevedores mostly worked in a ship’s hold, loading and unloading the cargo. They did the “stuffing” and “unstuffing”, a skilled job that marked them out from dockers, who worked largely on the quayside. Over time, the two jobs gradually merged together. As the 20th century progressed, most dockworkers increasingly found themselves in the transport workers’ union T&G. Eventually, with the growing spread of containerisation in the big ports, the NASD eventually merged with the T&G in 1982.
In our case, after many years of holding out against the inevitable, CoHSE eventually merged with Nupe and the local government workers’ union Nalgo to form what is now known as Unison in 1993.
Why do I mention my experience of trade unions in the 70s and 80s? Because, it seems to me, there are several lessons to be learned from it.
One is that groupings set up to represent the interests of their members are viable only as long as their membership is numerically sufficient to sustain the organisation itself, as well as its role.
In the case of Apfa and the NAPF there are questions as to whether this will always be the case. For the NAPF, it is the decline in the number of occupational pension schemes that is the problem. For Apfa, the issue is more to do with the perceived relevance of the organisation to its actual as well as prospective members.
Of course, you can always broaden the scope of the organisation itself. But if so, you must be able to show you have influence sufficient to deliver results for members, if not in the immediate term, then certainly further down the line, once it grows. It is hard to see either Apfa or the NAPF being able to do that. In that context, it is hard to understand why Apfa agreed to split with the Association of Mortgage Intermediaries in 2012, when the overlapping interests of both sets of members would have been better served in one organisation.
The ABI, on the other hand, retains potential. Its members are repositioning themselves to take on greater presence in the fund management space and if the trade body itself were to seek to represent these specific interests more fully, it could prosper even where its life side begins to falter, despite some defections.
In turn, this raises questions about the merger in June last year between the ABI’s Investment Affairs division and the IMA, which led to the creation of the Investment Association at the start of this year.
Arguably, in a situation where many potential IA members are declining to be represented by their trade body, not to mention those who have stated they are leaving, a weakened IA might be better off within the ABI itself.
But my final point is this: what are trade bodies there to achieve? And how might they achieve it? Whatever their objective, the best chance of success for the industry lies in growing the market and winning over more consumers. Yet the actions of the ABI, as well as the IA in recent weeks, suggest they would far rather close ranks against consumers.
They are being aided and abetted in this approach by a change in Government strategy towards the financial services industry, doing away with supposedly “onerous” regulations and making it easier to sell duff products to consumers.
This is, I suspect, the new direction of travel for the FCA, as evidenced in its Financial Advice Market Review. It may also explain why the IA felt able to defenestrate Daniel Godfrey. Why bother listening to the needs of consumers on issues like product clarity or how to avoid misselling when the Government no longer requires you to? Ironically, this proves my final point: a trade body’s influence is only as effective as the colour of the Government it is talking to. Right now, blue is definitely the colour.
Nic Cicutti can be contacted at firstname.lastname@example.org