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Stephen Gay: Independence will be the gold standard


Aifa director general Stephen Gay says he believes independent advice will remain the gold standard as members await a decision on whether the trade body will admit restricted advisers after the RDR.

Aifa is currently conducting its strategic review which will guide its future direction and is likely to reveal if it will broaden its membership.

Gay says: “With everyone asking about the question of independence, it would be ridiculous for us not to consider it in a root and branch review of our organisation.

“I cannot decide Aifa policy but I can influence it and I am a very large part of the process of creating it. I am not changing my view that independent advice is the gold standard of our profession.”

Gay says the number of IFAs who will remain independent will be influenced by how strict the FSA is in monitoring its new rules. “The number of people that remain independent will depend on the appetite that the FSA has got to police the division it has created,” he says.

Gay is calling for a progress report from the FSA on RDR implementation. He says: “I would like assurances from the FSA about whether or not the implementation is going horribly wrong and at what point it would decide it needs to change tack. The problem is nobody knows the answer.”

Gay says the FSA needs to do more work to ensure IFAs understand the RDR remuneration changes. He says: “It is not universally understood what adviser-charging entails, even after all the time spent debating the matter. I have had enquiries from IFAs who were of the view that they were not able to take an ongoing revenue from a client after 2012.”


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There are 11 comments at the moment, we would love to hear your opinion too.

  1. Accept that the £millions have been wasted by the FSA and then sweep the RDR away. Start from scratch with proper professional and respectful dialog with the ‘new’ regulator, parliament and the active adviser sector. Our industry has suffered so much for so long (25.years) where no one has benefited including the most impotant people, our industry customers, although they have suffered and will suffer much more under RDR that I am amazed that it has gone this far. FS requires a period of stability with FS experienced people running the show with the core objectives being consumer satisfaction (no more self indulgences) and a regulator that IS answerable for it’s actions. It won’t be long, if as expected, RDR roles out that this once fantastic industry of ours sinks into the abyss!

  2. AIfa is gearing up to move the goalposts.
    There will not be enough independent advisers around post 2012 to keep aifa in the style to which it has become accustomed. It naturally follows that aifa will have to allow restricted advisers to become members if it wants to remain viable.
    Now that the reality of the consequence of their lack of support for advisers, particularly re the long stop, is beginning to dawn on them aifa realises it has shot itself in the foot.Serves them right.

  3. John Blackmore 8th April 2011 at 9:31 am

    Disagree. Being an IFA post RDR runs the risk of becoming a jack of all trades.

    Those who want to offer specialist complex Independent advice will need to either go Restricted or be work together with others in a professional practice.

    The sole trader IFA will simply cease to exist.

    Even those who work together will probably eventually be classified as restricted. It will the practice that is Independent not the adviser.

  4. The previous commentators appear to have been sidetracked by the perennial RDR issue. The main issue is who does AIFA exist to serve? In my opinion, the name should give this away. However, it is clear that many IFAs are, in reality, multi-tied agents, or are conflicted by their reliance on commission to provide their income.

    AIFA has a choice.

    It can either assert itself as the professional body for truly independent (and by definition, fee based) advisers, who act solely in the interests of the client; or it can become a commercial affinity group for both independent and restricted advisers.

    If it opts for the more ‘profitable’ option, then it is damned by its own actions.

  5. Post RDR being Restricted doesnt mean you need to be tied or multi-tied.
    Thats a pre-RDR business model.
    You can still be running a small private business acting on behalf of your clients, but not manging to comply with the new more onerous definition of Whole of Market. Are you sure YOU will still be Independent post RDR?

  6. Green Eyed Monster 8th April 2011 at 1:06 pm

    Restricted is a deriviative of Independent.

    So you can be whole of market or restricted and still be independent. Unfortunately the FSA appear to have difficulty understanding this and appear to be equating restricted with tied, and independent with whole of market only. .

  7. The majority of “small” IFAs will have to become restricted as they will not be able to demonstrate “independence”, or will not wish the financial cost or even have the ability to cover all bases, the FSA has won. Control, control ….they’ve beaten us.

  8. Michael Fallas 8th April 2011 at 4:30 pm

    “Gold standard”, does that mean you will need a gold bar to pay for it?

    I have no faith in the FSA and little faith in AIFA so it makes little difference both do what they want regardless of those who pay them.

    Nice work if you can get it.

    Wonder what qualifications they all have?

  9. I suspect AIFA numbers are down. Many IFAs are annoyed with the AIFA stance on grandfathering and have voted with their feet. In view of this AIFA must accept a wider membership of restricted tied advisers. You will remember that this was tried before when David (FSA) Severn took over AIFA. If AIFA represented IFA instead of the FSA and Networks they would have no need of new members.

  10. Never give up Mark Garnier and Harriett Baldwin are still battling on behalf of us! Have you completed the FOS survey on the Panacea website Mark Garnier has asked us to complete for the TSC? If not do your bit now! The more we stick together to press home our RDR issues the better!

  11. Julian Stevens 9th April 2011 at 9:11 am

    The question that needs to be asked is just how many financial advisers currently operate in accordance with the FSA’s (latest) definition of whole of market independence. The answer, I suspect, is vanishingly few. For the vast majority of practices, the criteria are impractically onerous, for the vast majority of clients unacceptably expensive and, when all else is said and done, hardly necessary.

    Independence means being able to provide informed and insightful analaysis of and advice on all the products of all the providers that make up the market place, irrespective of whether or not you’d advise a client to commit money to a particular product or leave money already invested in it. It really isn’t necessary, much less worth what it would cost, to analyse and compare in exhaustive detail the suitability or otherwise of every single pension or investment product on the market for every single customer.

    Most advisers have their favourite products with their favourite providers and recommend them regularly in the knowledge that they’re unlikely to backfire and blow up once up and running.

    All that most clients want or indeed need to know is what it’ll cost them to invest, what the charges are along the way, what it’ll cost them (in terms of both charges and tax) to get out and the funds and functionality available along the way.

    Is the FSA really suggesting that anyone who wishes to call themselves independent is going to have to compare every possibly suitable product on a mix of all those parameters for every single client? If so, then quite evidently a very large shot of reality needs to be injected into its thought processes. Maybe the same might be said for AIFA too.

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