There were two intriguing aspects to last week’s Question Time discussion, in which BNP leader Nick Griffin was given a platform to explain his views.
The first was just how cowardly Griffin is and unwilling to admit the truth about his racist views. It was astonishing to watch the bare-faced cheek of someone who, when confronted with a quote of something he had said, repeatedly denied ever uttering those words or that he had never really meant them.
The second and equally fascinating aspect of Griffin’s TV appearance was the way that mainstream politicians twisted and turned when put on the spot over immigration. Justice Secretary Jack Straw was reduced to bleating how, despite appearances to the contrary, he was far tougher on the issue than most people presumed. As Straw squirmed, Griffin smirked.
Trying to outflank your opponents by attempting to steal their thunder is a tactic as old as the hills, of course. Margaret Thatcher did it in the late 1970s, when she told us she understood the fears of those who felt they were being “swamped by people of a different culture” – dog-whistle politics, aimed at potential National Front voters of the time.
Moving on to another subject, Aifa director general Chris Cummings recently called for a review of the Financial Ombudsman Service, speaking of his “concern” that its pronouncements are creating a “second tier to the regulatory structure”.
Chris says he wants the FOS to become “a smaller, cheaper operation, sharing resources with other parts of the regulatory structure.”
Among the changes demanded by Aifa to the way the FOS operates are the introduction of a long stop for IFAs, “a no-loss, no-fee” system so that IFAs are not charged if they are cleared if any wrongdoing by the FSA, claim management firms to be included in the annual levy and “for the FOS to be subject to the rule of law and bound by legal precedent”.
Now, the reality is that these demands have been debated at length over the years and are highly unlikely to be successful.
The long stop is largely irrelevant to all but an infinitesimal minority of advisers. In the years to come, it will become even more so, as the volume of claims specifically linked to with-profits endowment sales subsides and disappears.
Similarly, the number of advisers who are stung by the “three-free” case limit per regulated firm is very small indeed. Should this limit be raised, perhaps to four? Arguably yes, but how many IFA firms would this really benefit: – a couple of dozen at most.
In any case, that’s not what Chris or Aifa want – he is calling for something far more drastic, whereby IFAs pay nothing at all if they win.
It is worth noting that he appears to demand such a system only for IFAs. If it were applied across the industry it would inevitably lead to massive charges for firm the FOS finds against. Almost certainly, any small IFA business would collapse the minute it loses a case.
The long stop is largely irrelevant to all but an infinitesimal minority of advisers and will become even more so as the volume of claimes linked to with-profits endowments subsides and disappears
Then there is the issue of “law” and “legal precedent”. Chris must know that the near-total majority of FOS findings are broadly in line with existing law and legal precedent. Above all, the primary aim of the FOS is to try to provide some form of natural justice to the way complaints are handled. It generally achieves this and if he does not accept this fact I challenge him to give me examples of where I am wrong.
Inevitably, mistakes will be made – incidentally, having a negative impact not just on IFAs but also on those who complain against them. There are a number of cases I have seen over the years where a complaint has been turned down that should not have been, in my opinion.
Either way, to pretend that FOS judgements do not follow long-established precedent on the whole is simply wrong.
Nothing in what I have said above should be taken to mean that there are no grounds for improvement in the way the FOS operates. But if the financial ombudsman so patently does not need the kind of changes that Aifa is demanding, the question must be asked, why are these issues being raised now?
To understand that, it is worth looking back to a document first prepared by Evan Owen in February 2007 on behalf of the IFA Defence Union, which reached almost identical conclusions on most of the FOS-related points raised by Aifa several years later.
Until recently, Aifa has not to my knowledge made reform of the FOS a central plank of its vision for a post-RDR world. It is true that it has repeatedly called for a 15-year long stop in the past few years but the carbon-copy resemblance between Chris’s statements last week and Evan Owen’s almost three years ago takes this a significant stage further.
So, to ask the question again, why now? In his recent Money Marketing column, Alan Lakey spoke of the “senior industry figures” who have urged him to set up the Adviser Alliance. Is there a connection between the AA’s launch and Aifa’s new-found discovery of the need for a root-and-branch review of the FOS? You tell me.
Nic Cicutti can be contacted at firstname.lastname@example.org