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The Mcflipping point

For anyone who makes a living from the printed or spoken word, one of the greatest pleasures of our work is the occasional ability to somehow conjure an indelible image in the mind’s eye using a few well crafted words or phrases.

Orators have the same gift and, by combining it with a particular delivery, they can create a mood and affect the way people think and behave for generations to come. Sadly, the financial services world rarely offers the opportunity to hear or read concepts spoken in an exciting manner, partly because the subject matter is boring or, more often, because the person voicing those views is.

Occasionally, there are elegant exceptions to that rule, thankfully. One of them came last week when I was reading Money Marketing editor Paul McMillan’s assessment of how Aifa director Rob Sinclair had “performed” when giving evidence to the Treasury select committee’s review of financial regulation.

As Paul remarked, Aifa tends to be unlucky when its representatives appear before MPs. Five or six years ago, director general Paul Smee was, perhaps unfairly, savaged by the committee over the trade body’s alleged failures to speak out over some misselling scandal or another.

This time, paradoxically, Rob Sinclair came in for a hard time over Aifa’s failure, or otherwise, to oppose the FSA’s retail distribution review strongly enough and highlight the fact that one of the RDR’s consequences will be to create an “advice gap” among consumers.

This advice gap had earlier been outlined by MoneySavingExpert’s Martin Lewis, who reportedly told members that he is “not the greatest fan of IFAs” but that they were “better than nothing”.

But anyway, back to Paul McMillan’s take of the hearing at which Sinclair made an appearance. Paul set the tone of the meeting by pointing out that while Aifa has tried to oppose certain aspects of the RDR, it also “decided a major confrontation over qualifications was unlikely to succeed with a regulator that was not for turning”.

I think this sums the trade body up very nicely. But it is Paul’s description of what happened next that brilliantly sums up both Sinclair’s demeanour and Aifa’s current stance: “Sinclair walks into the committee meeting to discuss the proposed restructure of regulation and is bombarded with RDR complaints.

“His response was more of a weary warrior explaining a past defeat in battle rather than the general preparing his troops for a fight that Andrew Tyrie and his committee were expecting.”

The only question I have after this impressively deft portrait is, does it potentially signify, as Paul hints, that were Aifa and financial advisers to push hard they might get a respectful hearing in their attempts to either water down or delay key aspects of the RDR, specifically the issue of qualifications?

Paul appears to think so. He points to the number of MPs who are now – belatedly – sympathetic to some aspects of the IFA cause and suggests that “if as we move much closer to the RDR it becomes clear that a large number of IFAs will not meet the new requirements, you would expect more pragmatism from the policymakers”.

That is certainly one possibility. Another is that the FSA will continue to push ahead with its plans and will be supported in that aim by Treasury financial secretary Mark Hoban.

Paul describes Hoban’s contribution to a discussion on the issue of qualifications as “unnecessarily antagonistic” in saying that “the current minimum financial adviser qualification is at the same level as a diploma in shift management offered by McDonald’s”.

As it happens, Hoban is, strictly speaking, correct, certainly in terms of the level accorded both McDonald’s qualification and the FPC by the QCA’s own accreditation system. In fact, you have to spend much more time in the classroom to obtain McDonald’s own shift leader qualification than I did to pass FPC1 and 2.

My concern with believing that the 7th Cavalry, in the shape of half a dozen or so Tory MPs, is poised to ride over the hill and rescue advisers from the task of sitting new QCF level four exams is that if it does not happen, IFAs will find themselves driven out of the industry.

Let’s be clear, even MPs do not believe they will be able to stop it from happening. Harriett Baldwin, MP, an alleged IFA supporter, was quoted in an interview as saying about the RDR proposals: “We have no ability to change the regulation.” Although she is among those in favour of some sort of grandfathering, she added: “The discussion may be too late”.

I believe she is right. IFAs have just under 800 days to get those qualification

Nic Cicutti can be contacted at


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There are 42 comments at the moment, we would love to hear your opinion too.

  1. I don’t agree Nic.

  2. Nic often seems to incur many IFAs’ (note,many of you, picking up on one of Nic’s previous themes, the correct position of the apostrophe) wrath. I’m not one of them so, for the sake of some balance if nothing else: well-said Nic, well-said indeed!

  3. The debate amongst the MPs did not only focus on qualifications, which is what some reports would suggest but also on the huge detriment caused to the public by the removal of choice as to how the consumer pays for advice and this was recognised repeatedly by a number of MPs. It is this awareness of the unfairness in delivery of retail advice that is likely to be the impetus behind a proper debate in the House of Commons.

  4. I was so angry after hearing Hoban’s words that I reached my McFlipping point & emailed Garnier, Baldwin, Vince Cable & my local MP.

    Incidentally I’ve taken 4 exams this year & passed, so almost there. So technically does that class me as a McAdviser???!!

    What level of advice does that put the Banc Assurance sector I wonder?

  5. I just read a newsletter from Harris Interactive and the sad truth is this illustrates why RDR (for all its faults) is required if advisers are to distinguish themselves from Banks in the eyes of the public.

    What is shows is that consumers
    * trust IFAs no more than they do Bank Advisers (56% vs. 55%)

    * think neither are sufficiently qualified (21% and 16%, Doctors score 90% in the same survey, even accounts get 60%!)

    * are equally concerned about commission bias when dealing with IFAs and banks (10% for both IFAs and Banks)

    The only glimmer of hope for those resisting the forthcoming changes is that 30% of consumers expressed a preference for paying by commission, but more people 31% said they didn’t know!!

    Isn’t it great to hear what consumers think for once in this debate.

    It’s time to prepare for the changes and create a truly distinctive profession.

  6. I don’t agree with him either.

  7. I think all policemen should be taken off the beat until they are qualified in law to that of QC level.

    The so called powers that be are terrified that us IFAs my leave the business and then the whole industry goes into turmoil.

  8. Why the FSA and Mr Hoban seem to assume RDR cannot be improved upon staggers me. It is as if they don’t wish to deal with it rather than find a better solution partly because many MP’s including Mr Hoban don’t feel that they can instruct the FSA what to do as I have found out in letters I have received from Mr Hoban to my concerns.

    The FSA are a law unto themselves and even MP’s I think are starting to believe that or if they get an awkward question then they use that as an excuse and say it is the FSA you need to talk to.

    Can you talk to the FSA I wonder, anyone had any success on that?

    Also why is Martin Lewis considered an “expert” to be before MP’s giving his opinion?
    He is not regulated by the FSA and his website promoted Crown Currency Exchange as one of the best firms offering the highest exchange rates which went bust to the tune of some £20 million.
    Calling Mr Lewis to give advice before MP’s further cements in the publics mind that he is just that an “expert” in financial matters and many will thus believe his web site is providing “expert advice” which it is not as it is just “information” as he often claims when things go wrong.

  9. I refer to Harriet Baldwins comments regarding “it may be too late for discussion” It does not have to be, RDR could be extended for further consultation bearing in mind that the FSA were considering stopping it at one of their Board meetings but did not want to “in case they lost face” So if they can consider that their must be plenty of time for further discussion. Considering the number of years that the FSA have been making their own rules, I am surprised despite lobbying that MP,s have left it to this stage to get involved. I accept that some were not in office and wer not able but the FSA has been operating like a run a way train without anyone in government trying to stop it.

  10. The FSA is fraudulent in its claims of claims consultations where none existed other than were fixed template websites designed and set by the same. Networks and product providers saw benefits in the gift of members trail as they exit and the whole sordid process stinks. The ideas behind RDR lack credibility and the commission bias is unproved (See Charles Rivers study). If the FSA was a local authority RDR it would already be in the bin and a third of the FSA jobsworths would be redundant and I’m glad that good people continue to fight for what is correct.

  11. @ Mark Turner

    “It’s time to prepare for the changes and create a truly distinctive profession.”

    No problem Mark. Level 6 minimum, Fee to be paid directly by the client – ie no smoke and mirrors – for advice given rather than product sold.

    As for the remaining 95% of the Industry there is no justification whatsoever for level 4 or the abolition of commission.

    In this sense Mark Hoban is correct in his otherwise rather insulting Mac comment – Most of the day to day work of the average IFA is really not all that complicated.

  12. I personally think that the RDR battle is lost and we are just seen as a bunch of whingers (excuse the spelling not sure), but basically people who moan a lot and do no good for society whatsoever.

    We have not to my knowledge won one argument or concession with the FSA and are unlikely to do so until we present a truly united front.

    I suggest that when the next battle comes along, we do as they say above, someone becomes the General and rallies the troops and we march on Downing Street or Westminster and just tell them enough is enough.

  13. RDR epitomises everything the FSA has stood for and everything they have failed to achieve.

    It is an astonishing display of hubris, lack of respect or regard for the consumer and an enormous boost for the banks and larger insurance companies.

    The fact that nothing has been done despite minutes from a board meeting evidencing all of the above is an indictment of our system of democracy.

  14. FPC is a McQualification. So What?

    IFAs qualfied at that level rarely use their FPC certificates to convince their clients. And clients have not been going to these IFAs all these years because of their qualifications…

    I for one do not go to McDonalds because their shift-leaders have an NVQ – I go because its convenient, and I can rely on them to deliver that great rubbery taste.

  15. Who was it that suggested the Bigmacqualification in the first place? FSA or Ronald McDonald?
    It was good enough standard at that time.
    Maybe the FSA should conccentrate on the cowboys who give this Industry a bad name as qualifications will not stamp out crime.

  16. As ever, Nic, the sun shines out of your oratory.

    The battle is by no means lost yet.

  17. Nic, equating your study time for FPC 1 & 2 with that required for shift management at McDonalds is not rational.
    You have been around the Financial Services industry for many, many years and have therefore presumably acquired knowledge that allowed you to ‘skim’ the study books as I did.
    The main things to look out for were the places where the ‘Politically Correct’ box had to be ticked rather than the correct answer.

  18. Clearly there are many who are happy to allow a regulatory bully to impose the power of judge jury and executioner on an industry sector with so few complaints (2%). We can do without them or their support because truth is universal even if recognised as such at the 11th hour.
    PS: Always save your best punch for the 15th round!

  19. Extract from Adair Turner’s Mansion House speech in September:

    ” … in many retail financial markets, the imbalances of knowledge and power between consumers and providers are so profound, and the potential for perverse incentives so great, that even highly competitive markets and extensive information disclosure are insufficient to protect consumer interests.”

    Does RDR – in the round – resolve that central problem as outlined by Adair Turner – or does it – if anything – exacerbate it?

    Does passing exams resolve it – or does it widen the gap over the asymmetries of knowledge that advisers are there to reduce not just for the high net worth but for all consumers?

    Do increased capital requirements not only increase the barriers to entry into the market but also inevitably call for a greater return on the capital employed which in turn decreases the available choices for all those who need advice because they will no longer be able to afford it?

    Does the “FSA designed bias” of increasingly divergent factory gate prices based on volume sales (not advice) improve the position for the consumer or worsen it?

    If Adair Turner is correct in his assessment of the problem – why does it seem likely that RDR will reduce the ability of the majority of consumers to seek and receive advice?

  20. Neil F Liversidge 29th October 2010 at 12:26 pm

    Rehearsing all the practical problems likely to result from the RDR would be tedious and pointless in this forum; we’ve done it ad nauseum here and elsewhere. The underlying cause however is worthy of note and that is the FSA’s massive arrogance, its high-handedness and its medieval-Pope-like belief in its own infallibility. Those traits led the FSA to decide its agenda before embarking on a costly pretend consultation in the course of which it has wasted £1.8bn. Those of us who do not accept the doctrine of FSA infallibility (does anyone after its catalogue of disasters?) think it is worth fighting for a fair hearing that might produce a more common-sense outcome. This delusion of infallibility probably stems from the immense power they have been imbued with by a government which, according to Hoban, is content to let them do what they like. They think they are now themselves politicians entitled to rule. They certainly act like them. Some time back when the government first proposed the reintroduction of tax-relieved pensions term assurance I wrote to a senior minister begging them not to make such a stupid mistake and explaining that if they did bring back tax relief then the insurers would simply jack up the premium to trouser most of it. In due course I received a patronising “we know best” response explaining to me that in future customers would only pay £7.80 instead of £10 for a policy and that consequently everyone would get more valuable life cover as a result. And what happened? As we know, the insurers duly jacked up the premiums and trousered the tax relief and a large sum of money was promptly transferred straight from the exchequer to various insurance companies.

    The FSA’s attitude today, and Hoban’s, is no different. They know best. Except of course that the bank-induced economic disaster, Equitable Life, Pacific & Continental, Keydata and all the other mistakes we are paying for, and writing top-up FSCS cheques for, prove that they damn well don’t.

  21. Nic, you will know from your previous occupation that when something is wrong you stand up and say it is. When the hard of hearing smile blithely and lift the consumer flag that little bit higher one is predisposed to shout and wave the arms.

    McHoban knows very little about this industry. Like many politicians he has been insulated and fed pre-programmed words by Treasury minions. His views are formed by his PWC legacy and the fact that his mother has had good advice from her bank!

    So many respected individuals have now stood up complaining about the RDR that surely, even the most incorrigible politician or journalist must accept that something rotten is growing at E14.

    The industry knows that the ‘consultations’ were a travesty and that the voices emanating from the banks and the well-meaning but deluded consumer lobbyists are louder than those of advisers.

    One doesn’t accept habeas corpus or any other infringement of human rights so do not expect those who feel strongly about these matters to settle down, smell the coffee, bite the bullet or otherwise assume a supine position whilst the industry self-immolates. Particularly when there are cheaper, simpler less disruptive solutions available.

  22. Someone once described gathering IFAs to speak as one as being akin to “herding cats”.

    I have tried to imagine a more difficult creature to “herd”, how about sharks? No, Mike says you can use a piece of bleeding meat to gather them, how about slugs? No, Mike says you can use some lettuce… what can you use to gather IFAs?

    Well, some like commission, some like fees, some like exams, some like blogs…

    More than anything else they like to express their version of what is right or wrong, whether they are right or wrong, because they are always right!

    Can you tell me whether your vision of the future and what the FSA is trying to achieve is what the man on the Clapham Omnibus wants, or needs?

  23. In my view if you want to know what is right then take the opposite view from Nic. He has this unique ability, but quite a valuable benchmark so thanks once again Nic!

  24. IFAs deserve better recognition and Press than they have hitherto received. Yes there is a small minority who are guilty of poor advice, miss-selling and fraud as we all know, but the majority of IFAs provide good quality advice as the statistics prove by the low level of complaints received by the FOS and particularly in comparison to other retail distribution channels.
    Yet IFAs have been hit with the same sledge hammer to crack a nut and one understand the feeling that they are blamed for miss-selling when investment returns have failed, despite advising clients of the associated risks. To address this issue the regulatory powers have caused billions to be spent which far outweigh the actual amounts to be re-addressed. These costs have had to be picked up by the financial services Industry and if we believe the press, the IFA sector appears to have had a disproportionate amount levied against them by the FSA. In my opinion it is about time that the FSA was brought to account on the costs it has incurred and the value of its activities against the colossal amount that has been spent by the industry and the taxpayer.
    Most IFAs believe in treating their clients fairly, offering the best professional service in a compliant manner in order to foster trust, good working relationships and more importantly referrals for their businesses to survive. They can be qualified to give this advice by experience gained through years of service ratified by CPD or professional qualifications. Importantly, they will also have the interpersonal skills to assist their clients achieve the best financial position for themselves. IFAs are needed to help the public close the current savings gap and service the ailing mortgage market. It is therefore ridiculous to force through changes that would affect this service to the extent that is currently being imposed.

  25. Lewis actually said ‘Now, I’m not the greatest fan of IFAs, but I certainly think they’re far better than tied agents’

    MCjournalist said above ‘“not the greatest fan of IFAs” but that they were “better than nothing”.

    Like I said in a previous blog where our Mcjournalist said journalists were qualified and IFAs could not type, I would suggest IFAs who can type to do the journalism as there is bound to be one or two capable of typing but more importantly capable of relaying information correctly.

    The transcript is on the treasury site if reading is as strong a point as typing for him.

    We even have the enemy within.

  26. McHoban £150K BigMac 29th October 2010 at 2:05 pm

    McHoban MP recently received advice and services (not payment) of £150,000 from Compliance Company, Oliver Wyman Ltd, whose core business activity advice to Corporate and Retail banking and to identify opportunities for growth. This gift is disclosed in the House of Commons, Members register. The Ministerial code states that conflict must not arise or “appear” to arise!

    RDR will benefit banks, Wyman deals with banks and has give advice and services to a man that controls the destiny of IFAs who are bank compeditors with 67% of distribution!

  27. I agree with Leslie Squires (and many others posting here)
    As to the poster McHoban £150K BigMac, whilst this knowledge is important, please do not try to draw conclusions/put them in to my mind unless you are willing to post comments liek that in your own name.
    Bringing it to our attention for us to decide whether we believe there is a conflict of interst is one thing, the implication is not……. The same is true to say with regard PWC and Keydata involvement on both sides does not mean conflicts, just that they may need managing of clarifying and one may have to daclare an interest and step back. Just because I had a friend who fought in the Iran Iraq War as an Iranian officer does not mean he was muslim or even a committed member of the regime (he was an agnostic born a Jew in Iran who fought for his country)

  28. There is a lot to be said for improving standards in the Industry – you just need to look at how standards were raised when the FPC 1, 2 & 3 threshold was introduced, but the bar does still need to be raised.

    As someone who has already achieved Diploma status, I recognise that we need to raise the bar and introduce more professionalism into the industry so that we become more advice lead rather than transactional – a criticism probably justifiably levelled at the bank advisers.

    Let us not allow this debate to provide Nic Cicutti with an ideal opportunity to once again get on his worn-out soap-box and demonstrate his ‘shining wit’ – apologies for my bad spelling!

  29. I have just realised that Mr Hoban was in fact talking about the Food Standards Agency when he mentioned the McQualification.

    He should know more about the Financial Services Authority before he comments perhaps on Financial services.

  30. Well FP1 2 and 3 certainly had the consumers clamouring to use us.

    They certainly bought in to that idea and compensation fund costs and PI insurance is now cheap as chips as a result.

    I trust this FSA emphatically to continue sorting things out in the same manner as their track record shows.

    More of the same will I am sure achieve the same result again, if we continue to go the opposite way to all current retail trends who knows we may be able to turn the last light off in doubly quick time??

    Who says anyone needs ask the consumer what they want? Just put in some public servants and an ex banker or two and they know what they are doing!!

    Have a nice weekend folks!!

  31. Well, looks like Lunchtime O’Cicutti (only joking Nic) has once again provoked a fevered response and thereby justified his existence.

    Just in passing, surely the RDR is the FSA’s brainchild; the FSA is due to go in the 1st quarter of 2011 according to the latest report we have heard; the RDR is due to be instigated in January 2013; so it will be in the gift of the new authority,notwithstanding any strictures from Hector “I have no idea how many people will be affected” Sants, to announce a delay in implementing RDR until it has consulted further. We have what is precious close to being a precedent with the relatively recent age 75 to age 77 change to unsecured pension on the grounds that the whole area is going to be looked at again.

    Whatever the eventual outcome the suggestion that it is too late to do anything is complete nonsense. For what it is worth my feeling is that the RDR will not be imposed in its current format in any event.

  32. Nic I believe you were once a mental health nurse. Thus consider how your former profession approached this same debate re degree level qualifications when this was applied to new entrants. There was no suggestion that existing nurses should re qualify. Is this unreasonable?

  33. McHoban £150K BigMac | 29 Oct 2010 2:05 pm 31st October 2010 at 2:54 pm

    In answer to Phil Castle (Phil Castle | 29 Oct 2010 3:27 pm) comments, small IFAs’ without the resources of the FSA or the multi nationals such as Oliver Wyman Ltd need anonymity rather than risk the onslaught of litigation. Anecdotal evidence exists of outspoken commentator being “paid a visit” and further the case of Which Magazine bringing a defamation action against a famous IFA critic still lingers in the memory of some – but apparently not all IFA’s! Phil I have the greatest respect for you own personal brave stance but you will also note that being right can still mean being bankrupt in the civil courts. This information is already in the public domain and you can draw your own conclusions and hold whatever view come to mind.

  34. This is the problem with IFAs being unwilling or unable to work together and adopt a united front by challenging our MPs to look at RDR &MMR more closely. They will end up destroying our place in the market

  35. What I fail to understand is how those people (including myself) who are already qualified to Diploma level and beyond (perhaps even Chartered) and who have 10,15 or even 20 years of CPD under their belts, will, on 1st January 2013 be unable to proffer advice unless they ‘gap fill’. In my own case, the biggest gap is my inability to evidence training in the regulatory and ethical aspects of financial services. Given that I have grown up with all the changes in the rule book(s) which have taken place over the past 20 years and have never had a complaint, why do I now need to take an exam on the subject – how will passing such an exam make me a more competent or honest adviser ?

    Total TOSH!

  36. A couple of quick points from me:

    “the FSA is due to go in the 1st quarter of 2011 according to the latest report we have heard” – show me that in the parliamentary bill timetable; the FSA’s here to stay until someone changes the law, and that’s far from a done deal. Never turn your back on your enemy, even when he’s down…

    The other thing is, I remain unconvinced by people pointing to low levels of complaints as an indication they’re doing things right. It can also mean that the people you’re doing business for are ignorant or ill-informed (or even just plain lazy). I’ll accept it’s a useful proxy, but posters here seem to regard it as causal and that’s obviously wrong.

  37. I am not a fan of journalists,particularly those with bias and their own agenda.Nothing would be better.

  38. To McHoban £150K BigMac | 29 Oct 2010 2:05 pm

    Please do post the link and leave comment to a minimum if you post anon, that way we can draw our own conclusions rather than you try and influence our thinking without knowing what motive you might have.

    I am not for the banning of anon postings, but I do think they should focus more on discolsure of facts. If they wish to discuss matters, I again understand a desire for anonimity,but it shoulkd be the exception rather than the rule.

  39. @McHoban 150k Big Mac: I think the reason the well-known IFA commentator got sued was because he might have alleged things about the Which?/Consumers’ Association researcher that were a tad inaccurate, reflected on her personally and went beyond fair comment.

  40. @McHoban 150K

    Defamation is a rich man’s game even if you win! The distinction defamation and regulation of course is that defamation is fought before the courts and subjected to the rule of law and natural justice. The IFA on the other hand is “outlawed” and UK regulation is not subjected to the courts or the rule of law and therefore the IFA has no protection from the abuse of power not even from the courts. Anonymous posts are important. NB: Citywire has banned anonymous post but perhaps that is because Citywire is not impartial, is pro RDR and is packed with “yes men”. Citywire even calls you up telling you they don’t like the tone of your posts! Long live freedom of speech, even Nic Cicutti freedom!

  41. I agree Simon Mansell.

    I wonder why there is such a push top find out who the individuals are who are posting anti RDR and anti Hoban comment?

    The very need to know in this particular case but not in cases which go the other way is a concern in itself.

  42. @Adam Smith | 1 Nov 2010 12:51 pm

    Adam you say: “I remain unconvinced by people pointing to low levels of complaints as an indication they’re doing things right. It can also mean that the people you’re doing business for are ignorant or ill-informed (or even just plain lazy).”

    Answer: Can’t quite see your logic Adam? In 2010 IFA have less that 2% complaints but banks get 61% per cent of complaints. So by your logic 2% of IFA complainants are ignorant or ill informed but 61% bank complaints are clever and well informed?

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