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Perfect time for LIA and Sofa merger

Mark Ommanney Director general, the LIA

I have been reading with interest the debate on the proposed LIA/Sofa merger and in particular Len Warwick&#39s view in Money Marketing last week.

Many members from both organisations clearly feel strongly that the merger should go ahead in the interests of uniting the financial advice sector, creating one voice to represent members and to improve standards for the long-term benefit of adv-isers and consumers alike.

There are also those who feel that various aspects of the merger are unacceptable and and they cannot support the proposal.

A number of issues have been raised and I hope to provide answers to the concerns expressed. Taking them in no particular order:

The requirement for member directors to have passed at least three AFPC subjects or have equivalent qualifications During the 32 years of its existence, the LIA has been in the forefront of the campaign for higher standards and qualifications. Earlier this year, the LIA set out to change the org-anisation from a membership body to a professional association. It continues to encourage its members to advance to higher-level qualifications and if it really believes in achieving professional status, then, like other professional associations, it is appropriate that its member directors achieve higher standards themselves.

Find An Adviser website

The LIA does not have such a facility on its website and is keen to provide this improved benefit to members. It will be available to any member who wants to achieve passes at at least three AFPC subjects and, in return, the Personal Finance Society will be actively promoting this facility to consumers on behalf of members. The AFPC qualification threshold is seen by many users as a positive feature.

Member directors being in the majority

There will be eight member directors and six executive directors. In order to satisfy a technical accounting point, the CII, under company law, needs to be in a position to show that, if necessary, additional executive directors could be appoin-ted to provide for a majority.

It is important to understand that for this to happen, a number of steps need to be taken and satisfied, including consulting with the board, consulting with the members and the full CII council being consulted and approving this step. Having taken this route, if the CII still wanted to appoint a further three directors and it was not seen to be in the best interests of the society, not only would this be the nuclear option route but if members were not supportive, they could also vote with their feet. This option is there for legal reasons alone.

Further consultation time

In common with most other organisations, the articles state that a consultation period of 21 days is required between notifying members and an EGM. The decision by both the LIA and Sofa boards was that this should be extended to five weeks to give members who maybe on holiday, etc, the opportunity to attend roadshows, discuss the issues and vote.

With an informative membership pack and over two dozen roadshows up and down the country, five weeks should surely give members long enough to make up their mind. We should not forget that for years members have been encouraging both boards to consider merging and to ignore such requests would be perverse.

Finally, the name

Some love it, some hate it. Choosing a name for an org-anisation is never easy and various factors have to be taken into consideration. You must be able to register both the name and the letters, the designations and the domain names which narrowed down the names available enormously. The name is also int-ended to capture the public&#39s imagination.

If a member of the public looks in the newspapers for articles on financial advice, they turn to the personal finance pages. The public will immediately see the link between this and the Personal Finance Society.

To ensure that members who conduct corporate business or engage in financial planning are properly represented, the society will have faculties for such members such as the Faculty of Financial Planning. The society will be what the board and the members make it as opposed to it being just a name.

In any merger, the detail is agonised over. In any merger, there will be compromise. Throughout the merger discussions, three key questions have been at the forefront of the minds of those involved:

•Is it right for the memberships?

•Is it right for the financial advice sector?

•Is it right for the consumer?

On all three counts, both boards would argue strongly that the answers are yes.

With the accelerating pace of change in the sector and the loss of public confidence in financial advice, never before has the time been better for a merger to take place.

I suggest that it is unlikely that the time will ever be better again.


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