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Regulator reels as mps take up the ifa cause

The Treasury select committee is championing IFAs against providers in misselling cases and the consumer press is also backing them so the tide of public opinion is arguably turning in their favour.

The TSC last week grilled FSA chairman Callum McCarthy and chief executive John Tiner, suggesting that IFAs were being made scapegoats for endowment and other misselling scandals. The TSC brought up issues such as providers charging in excess of Lautro commission rates and the Ockwell v Seymour case, where Zurich was forced to pay two-thirds of the compensation for providing inaccurate marketing material.

LibDem Treasury spokesman and TSC member Susan Kramer was well briefed by the IFA community before taking on McCarthy and Tiner, with many IFAs sending her their grievances. She also said Money Marketing’s No Advice, No Protection campaign highlights how consumers are confused by the way that advice has been segmented by the regulator.

TSC chairman John McFall quizzed the FSA duo about the role of ambulance-chasers in misselling complaints and produced an ad in a national paper containing what he described as “provocative literature” from one of the firms that needed to be clamped down on. Labour MP Sally Keeble also brought up IFA concerns on the role of integrated advice.

BSA external affairs manager and Labour Parliamentary candidate Rachel Blackmore says the change of faces at the TSC was bound to create new emphasis and with the fact that FSA regulation is so high on the political agenda, it is easy to see why the committee is championing IFA causes.

She says IFAs are at the front line of financial services and the way that the spotlight has increasingly focused on the FSA recently has dragged in advisers.

She says Kramer may well have been lobbied hard by the IFA community but she is a strong politician who would not have brought up these issues if she did not believe in them.

Lansons public affairs spokesman Martin Koder says Kramer has a business background and would have taken considerable time evaluating evidence to make sure it was valid before putting it to the FSA.

Aifa director of public affairs Tracy Mullins was at the meeting and says it was a very different atmosphere from a year ago, with a less aggressive and more open-minded attitude to IFAs. Mullins singled out Kramer in particular as being knowledgeable on issues of concern to advisers.

She welcomed the positive comments about the plight of IFAs raised in the meeting and the increased political interest but says it is always going to be hard to affect opinion as consumers do not care where compensation comes from as long as they get it.

IFA Defence Union chief Evan Owen says his organisation has been lobbying the TSC in recent months about these issues and sees a sea change.

He says the credibility and perception of IFAs is improving among politicians, the judiciary and the public. In the past, advisers expressing grievances were classed as “old whingers” but recent discussion with politicians and legal experts has led Owen to believe that they are now being taken much more seriously.

He says the issue of FSA regulation and the part the IFA plays has shot up the political agenda, with public accounts committee chairman and Tory MP Edward Leigh calling on the FSA to be scrutinised by the National Audit Office and LibDem shadow chief secretary to the Treasury Chris Huhne floating the idea of setting up a Government agency to assess the burden of regulation.

Millfield chief executive Paul Tebbutt says he is delighted that the TSC has finally come to realise the great work that IFAs do but is sceptical that Government policy will be changed.

He says politicians are awakening to the compensation hysteria sweeping the country and comments from the TSC are a step in the right direction but it was going to take a huge U-turn of Government and FSA policy.

Some would also say that a recent editorial in the Financial Mail on Sunday, a paper determinedly pro-consumer, supporting IFA John Joseph in misselling claims against him as well as other high-profile cases such as former IFA Ivan Massow, shows a softening of opinion against advisers.

Aegon head of corporate affairs Francis McGee worries that others are getting carried away and that it is too simplistic to say the prevailing wind is turning in favour of advisers.

McGee says IFAs have never been friendless, with ex-Tory deputy chairman Howard Flight the last in a long line of those backing advisers.

McGee says: “Advisers, and the industry as a whole, still have a long way to go to reach a place were they are well regarded in the public. Just as it was always wrong to assume all IFAs were guilty, so it is wrong to assume that the tide has changed.”

McGee says there is a certain amount of grandstanding and headline-grabbing in such meetings and the committee would not be slow to criticise advisers if the chance came about.

But PFS head of public affairs John Ellis says the mood is changing, with both political and public perception on IFAs improving, partly due to improvements made by the adviser community over the years in training and qualifications.

He says at last the agenda is shifting, with more emphasis being put on discrepancies in marketing material from providers, and he welcomes the efforts of the TSC to highlight issues few other politicians have had the nerve to touch because of worries that they would be seen to be going against consumers.

Tebbutt says although it is good to hear support from the TSC, he quotes Einstein,”Try not to be a man of success but a man of value”, and says until politicians and advisers truly understand the value of advisers, bad perceptions will continue.

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