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The strength of FSCS anger

When I worked full-time at Money Marketing many years ago, one of the most satisfying aspects of my job was to attend IFA conferences and seminars around the country. Armed with a brick-sized mobile telephone, I would spend several days on the road every month, talking to IFAs and reporting on their views.

My MM colleague Natalie Holt clearly feels the same – last week, she was out and about at the Tenet annual business conference in Ascot to hear some of the industry’s great and good discuss a range of topics of interest to members of the network.

Among the speakers was Stephen Gay, Aifa’s new director general, who gave the audience his take on what are likely to be the next steps on the RDR. Two things stand out for me from his reported speech. One was his cautious belief that the FSA might show some flexibility with regard to the level four qualifications it is demanding from IFAs if they have not been achieved before the regulator’s December 2012 deadline.

The other was his defence of Aifa’s approach to influencing the regulator and others whom the trade body is in discussion with from time to time. Natalie quotes Gay as saying: “A pressure group can be very fierce about shortterm objectives without needing to consider the longer-term consequences.

“Shouting about things can be great but it is easy to burn bridges.” He added that it is the less visible trade associations, rather than pressure groups, that are “invited to the table” to influence regulatory policy.

With regard to the first point, my own gut feeling is that it will not be a blanket concession. It would most likely take the form of requiring IFAs to show evidence that they are booked either into an examination in the months immediately after December 2012, or that they be allowed to re-sit exams they have failed.

Another less likely possibility is that of looking at the specific qualifications that advisers currently have to see how close they are to meeting the full level four requirements, with time extensions available to those who are only a spit away from meeting them.

What I find equally interesting is Gay’s second comment. Over the years, I have picked my way through scores, probably hundreds, of Aifa speeches and never before have I come across one in which its director general is forced to defend the way his trade body works. What that indicates to me is that, among senior echelons at Aifa’s head office, one or two people are beginning to twig to the signs of discontent among ordinary members at the trade body’s softly-softly approach.

The problem with such a comment is it suggests there are two conflicting ways of discussing issues with the regulator. What Aifa seems to be telling IFAs is – either we do it quietly and responsibly or through “fierce pressure groups” who don’t “consider the long consequences.”

Actually, it does not have to either/or at all. Many years ago, one of my best friends was a postal worker whose main job was as a workplace representative for what is now the Communication Workers Union.

My friend was based at a very large sorting office. Because of the peculiarities of the Royal Mail system, everyone, both management and union, knew that if my mate’s office stopped working, deliveries to millions of homes and business would be severely affected within days.

My friend knew that strikes were potentially damaging for his national union. If it were to sanction a strike without going through procedures, it could be fined millions of pounds.

So what happened instead was an elaborate charade, in which my friend and his local union officers might pop out for a lunchtime pint to a local pub, where they would bump – entirely by chance – into a national official who would update them on the progress of negotiations over certain issues.

Lo and behold, a few days later, an unofficial strike would erupt at my friend’s local workplace. Of course, no ballot had been held before the posties walked out but the national union would sternly inform its members that the dispute was not condoned or supported by it in any way. Therefore its funds were safe and management were left in do doubt about the anger of rank-and-file posties.

If you have stayed with me so far, you are probably wondering why I’m boring you with an ABC of the realities of industrial relations in British society. The reason is there are some people in Aifa who are in danger of forgetting this fact.

Successful negotiations never happen because a bunch of well-meaning men and women sit opposite each other and calmly discuss an issue. There is always an underlying appreciation of the other side’s strength or anger over an issue.

That is why the actions of Martin Bamford and the 500-plus IFAs who have backed his open letter about the Financial Services Compensation Scheme interim levy, not to mention Alan Lakey’s Adviser Alliance are so important. They demonstrate what all the polite talking in Canary Wharf never will – that IFAs are angry – and they want something done about it now.

Maybe Stephen Gay, Alan Lakey and Martin Bamford ought to go and have a quiet drink somewhere. They could do wonders for each other.

Nic Cicutti can be contacted at


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There are 19 comments at the moment, we would love to hear your opinion too.

  1. Isn’t repeating the same behaviour time and again (i.e. the softly softly approach with the regulator) but expecting different results a sign of madness? Why the heck is Aifa’s Useless Council so easily satisfied with the lame excuses and alarming lack of ‘nous’ at Austin Friars and haven’t they heard of the Peter Principle (google it)

  2. Completely agree Nic (and thats rare – keep it up) – thats precisely why Adviser
    Alliance is so important and why AIFA has become a non runner.

    IFAs are angry

    Cant speak for Alan but not sure about the drink though !

  3. Stephen Gay and Martin Bamford are not in the same
    league as Alan Lakey
    Alan Lakey is not out to appease or toady up to the powers that be. He is on the side of the adviser. The other two are looking out for their own interests, although no doubt one of the Bams will be posting in a minute, that all they are concerned about is the client..
    They had nothing to say about the interim levy until a bill for 10k landed on their desk. Before that they ridiculed advisers who paid up for a JR.

  4. Steven Farrall (Adviser Alliance) 10th February 2011 at 3:09 pm

    Speaking as one of Alan Lakey’s ‘partners in crime’ (together with Derek Gair) in Adviser Alliance, the thrust of Mr Cicutti’s piece is exactly what I have been saying for years. IFA’s need more than one ‘representative body’ each with competing offerings – (note to FSA – competition works, bureaucracies don’t – see Andrew Tyrie’s comment vis a vis CPMA). AA for example can be more overtly confrontational than AIFA, and if I have anything to do with it, will argue rigorously on behalf of freedom and markets. This is an absolute anathema to the FSA who exist as an authoritarian bureaucracy.

    So, I for one am very happy to speak to anyone from any other group about all of this.

    But if speaking to anyone from the FSA (following personal experience of their authoritarian arrogance in connection with our TCF ‘interveiw’) I cannot guarantee to be polite.

  5. IFAs are generally not prone to rebellion. They are however well connected, erudite and, when roused, tenacious.

    Moribund regulators should now be “very afraid”!

  6. @Anonymous | 10 Feb 2011 2:24 pm

    Please show me where either Nick or I have ‘ridiculed advisers’ who supported the failed judicial review? Our position on that was always that legal opinion suggested it was going to fail. I’m personally not one for futile gestures, however noble the cause might have been.

    Of course there is an element of self-interest behind my campaign to get the funding of the FSCS reviewed. Please recognise that self-interest comes into everything that anyone ever says or does. It’s called human nature.

    I’m also concerned about the impact of the current FSCS funding structure of the future health of the retail financial services sector in general. Aren’t you?

  7. The fundamental problem at the core of all this is that the FSA sets its own agenda and anyone who disagrees……….

    Let’s face it, the FSA is accountable to noone and to no body and therefore doesn’t have to take a scrap of notice of anything that anyone else might have to say about anything it does or announces that it intends doing. You only have to read the Statutory Code of Practice For Regulators (which I recommend to everyone) to see that the FSA completely ignores it, in the smug and arrogant knowledge that ther’s not a thing anyone can do about it.

  8. AIFA has totally failed to protect its members both from RDR or FSCS..

    The FSA knows it is a pushover and ignores anything it says as it has nothing to fear from such a deliberately toothless body

    I am surprised that discontented members are not seriously considering creating an EGM to reclaim the Association for its membership and stop it being an ABI subsidiary.


  9. Not convinced Lakey and Bamford would see eye to eye on many matters but talking never hurts though without the FSA in on the talking it is hard to see how anyone can make progress. Even Hoban appears to refuse to listen to anyone especially his own MP’s and even the Treasury Select Committee is finding it impossible to make any real progress.

    It is all taking too long and over a decade of the FSA and we still don’t know how to manage (regulate) ourselves or protect the consumer in a sensible “cost-effective” manner.

    It does however seem IFA’s have a much better understanding of their own sector and it’s problems than the FSA do or ever will. Until they listen and actively provide two way communication it is hard to see any progress being made, meanwhile time drags on and on.

    Maybe we need to separate regulation of IFA’s completely from the FSA and have a seperate compensation system as well, such as a product

    Still can’t see why “product regulation” can’t work together with a “product levy” though I can see why the FSA would not like it as it would cut costs and take business away from them. The FSA is a massive business now and so needs to keep it’s revenue coming in like any other, lets not forget that.

  10. Being regulated by an unaccountable body who make us jump through hoops without a by your leave or appeal process is bad enough, to be proactively fined with no recourse is totaly unacceptabe in my view.

    Is it not time that IAFA stood up to the FSA and FSCS and said no.
    What would happen if everyone in the country simply said no I wil not pay this rediculous levy, I already pay enough and I have PI insurance if I get it wrong. The lasge networks and firm need to take the lead hear. What would the FSA do leave the country without financial advisors, othr than the Bank assurers?

    Prisoners can go to the European court of human rights and get a thier vote reinstated.

    I feel that my right to work in my chosen proffession is a higher human right than a criminal’s right to vote.

    IAFA should be taking the FSA and FSCS to the european courts and stop wasing out fees to them by cosying up to the FSA.


  11. Nic’s article raises some fundamental questions over the future representation of the IFA brand.

    Adviser Alliance was set up by three IFAs concerned at the appalling failures by AIFA to stand up against the unremitting torrent of bad regulation oozing from canary Wharf.

    AIFA claims to speak for all IFAs by dint of its automatic network membership ploy and events have shown that not only does it not speak for most advisers but it doesn’t seem to speak at all.

    Toothless, speechless, clueless you can choose your own adjective or add more.

    At Adviser Alliance we balance fighting against bad regulation with the equally difficult tasks of ensuring that our separate businesses continue to trade profitably. Perhaps the secret of our success in lobbying MPs and other parties is that we are IFAs who fully understand what is happening and the impacts thereof whereas the individuals currently and formerly running both AIFA and the FSA/PIA have never advised in their lives.

    Advisers who wish to join with us should go to

  12. Imagine your nasty neighbour of many years wielding a big stick, he is poking the nest of angry wasps outside your broken window. You invite all the other residents in your area to come into your house because it is safer than theirs…but they prefer to stay in their own homes with the doors locked and the curtains drawn because they fear the bailiffs will be calling soon, coming to see all of you in fact, apart from the nasty neighbour of course, he choked on the wasps because he couldn’t keep his mouth shut.

  13. It’s not just the FSCS levy which is an issue here.

    We pay our fees to the FSA in order that they do their job and regulate the industry, especially Products Providers. In the case of Keydata, they have clearly failed to do their job. This was a catastrophic regulatory failure.

    It is not unreasonable for us to expect some redress on this issue.

  14. I agree, everybody say No, that’s enough!
    Here’s an actual example of how unfair this whole system is – product sold by IFA to suit clients needs, client complains 4 years down the line on the grounds of poor performance of product, complaint is upheld, not against the adviser but against the provider whose literature is deemed to misleading, they are fined, the product is withdrawn but who pays the compensation – the adviser! Can that be right? Is it fair? Of course not, there’s some whole lot more bigger issues under this headline.

  15. Anonymous@ 2:24pm made a comment that Alan Lakey is on the side of advisers. I would like to add that he is also on the side of the customers, as the FSA are intent on taking away their freedom of choice and access to independent advice.
    As for AIFA. No, I’d better not get into that again.

  16. Christian Patricot 14th February 2011 at 11:38 am

    Question: what would happen if most, better still all of the major networks sent a joint letter to the FSA refusing to pay our fees into the FSA and FSCS until a fair deal for IFAs was agreed?
    Either IFAs who are not linked to networks use it as a means to gaining business in which case regardless of which trade body you support we should not be surprised that the FSA consistently shafts us or IFAs all speak as one at which point the FSA has to come the table with all our trade bodies and agree a modus operandi that is fair to both the general public who receive our services and us as a key and fundamental service provider.
    The banks seem to speak as one and have successfully threaten all UK Gvts with moving abroad unless they are dealt with as a special case.
    I do not think there should be any special case but it is time we should get to the FSA and say to them: “look guys we can’t carry on like this. Banks sell, fund managers and stockbrokers manage investments, lenders provide loans, regulators monitor and regulate them and IFAs advise clients. IFAs cannot be made to pay for others’ mistakes and failures. If IFAs fall short in their delivery of their service, then we pay.”

  17. @ Christian Patricot

    The FSA would simply withdraw their permission to trade and probably fine them all a large amount of money as well.

    What we really need is a Wikileaks investigation of the FSA. Bet that would be interesting reading.

  18. Christian Patricot 15th February 2011 at 10:22 am

    Michael, yes and this is my point.
    Would the FSA really be able to stop ALL IFAs / networks from trading and fine them all a large amount of money.
    Being French, we do like a bit of revolution from time to time! We see it as a good cleansing process. If the people in Tunisia or Egypt had all felt we cannot go into the street because we’ll get shot, you’d have status quo and no progress.

    If we stood up to the FSA would they really actively take the decision to suspend the availability of advice to the general population? However, it would only work if a majority stood up.

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