There are times when I really feel for Chris Hannant. It must be difficult for Apfa’s director general to find himself in the media eye all the time.
On the one hand you need to generate as many newspaper stories about Apfa’s activities as possible. Apart from anything else, the very future of the trade organisation you lead depends on your media visibility.
All the more so if you are walking a financial tightrope, as Afpa’s latest published accounts to the end of June 2012 suggest it might be doing.
It can sometimes be flattering to receive all that media attention. Even so, responding to constant calls from journalists asking you to be Apfa’s rentaquote can’t be much fun, not to mention all those articles you write in Money Marketing.
The difficulty is what to say. Looking at what Chris has written in recent months as well as what he has been quoted as saying elsewhere in the trade press, it is clear that a pattern is emerging.
First, is the repeated statement that the RDR is still bedding in. This line was apparent last week in Chris’s column for MM, where he wrote: “I believe it will take at least two years for the full impact of the changes to work through the profession, so it is far too early to draw firm conclusions about the outcome and impact of the RDR.”
Chris made much the same point in an article in another paper, where he commented on a survey by IFA firm Pi Financial of its members.
The survey found that 50 per cent of those polled said charging structures would not change as a result of the RDR and 30 per cent thought it had a beneficial effect on their business. This was the same proportion as those who said its effect had not been positive. The rest were undecided.
There, however, Chris permitted himself to be “cautiously optimistic” about the effect of the RDR on adviser numbers when end-of-year comparisons were made.
The second point Chris is making is that while the RDR is still bedding in, we should avoid tinkering with it. Again, he wrote in Money Marketing: “While the sector is undergoing a significant period of change, further changes to the regulatory environment will be destabilising to businesses’ ability to plan.”
Chris appears troubled at the way the FCA appears to be using policy creep to create outcomes that were, presumably, not part of the RDR’s original aim.
“What concerns me is that these ‘key issues’ were discussed by the FCA board less than six months into the RDR. The framework has been debated over six years.
“Advisers spent many hours and a lot of money preparing for and implementing the RDR changes. Many are still refining their business propositions as the changes bed down.”
To paraphrase Chris, this means advisers who spent years preparing for one expected outcome of the RDR are now faced with the devastating news that all their work was for nothing: the FCA has moved the goalposts and is demanding something completely different.
Really? Because that is not remotely my recollection of the debate over the past few years. My memory tells me that ever since 2007 what the FSA wanted, rightly or wrongly, was to create an environment where fees would be the accepted form of remuneration for a new generation of highly-qualified professional advisers.
The FSA also made it abundantly clear that it saw trail commission as being a payment that should be earned as a consequence of continuing service to a client in respect of the product sold.
Throughout that time, Apfa’s predecessor Aifa, not to mention the little splinter groups some of whose members now appear to be controlling policy at the new slimline trade body, bitterly resisted almost every aspect of the RDR, calling for delays in its implementation and endlessly arguing the toss about specific aspects of it, trying to put spokes in its wheels.
Then, once the RDR was in place, they discovered that, as with so many regulatory reforms in the past, you can briefly game the system by observing the letter of the law while completely ignoring its spirit.
At which point, they get dreadfully upset when they read in the FCA’s board minutes that the regulator is aware of what’s happening and is working out ways of stopping them from doing it.
In turn, Hannant gets wheeled out to mount a defence of his members’ business practices, asking for two years’ grace or more so they can eventually get to grips with the RDR – but only the bits they like.
Surely even he must know the FCA can’t allow that to happen. Better to deal with the matter now before bad practices become established, than allow it to linger on year after year and leading to another round of major regulatory reforms his members will like even less.
The problem is that if you do that, your members will not think you are fighting on their behalf. So you write columns that always look backwards and not forwards, for a constituency that while not particularly enjoying the RDR’s demands on their businesses, is slowly getting on with them. And, in its heart of hearts, it wishes you would too.
Nic Cicutti can be contacted at email@example.com