Aifa director general Paul Smee was hauled over the coals by the Treasury select committee this week for failing to condemn IFA firms that dump liabilities in shell companies.
Labour MP Nigel Beard demanded to know what Aifa stands for if it fails to protect the name of the industry from scandals such as Berkeley Berry Birch ringfencing potential liabilities in its Berry Birch & Noble Financial Services subsidiary.
BBB was cited by MPs as one of the firms that should be condemned by the industry for leaving the Financial Services Compensation Scheme to foot the bill for potential liabilities.
Chairman Labour MP John McFall demanded a response from Smee on what obligation of care the industry feels to investors who lose money through firms such as BBNFS.
Smee faced a barrage of questions but said he felt the FSA had taken appropriate action in dealing with BBB. While he did not condone the manoeuvre, he believed it was within solvency rules and something that occurred in every sector.
Aifa also faced criticism over its failure to sound the alarm over structured products as soon as it became concerned.
Labour MP Angela Eagle castigated Smee, describing his responses as “coy”. She said: “Deliberate evasion of response casts aspersion on the whole industry. From Aifa's point of view, shouldn't you be worried about that rather than protecting the reputation of a company that has been doing something like this?” Smee said: “I am very mindful of my obligations as representative of the trade body but I think we have to work within the law of the land.”