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Trading body blows

Two of the financial services industry&#39s leading trade associations are involved in a running battle over a number of issues seriously affecting the IFA community.

The ABI represents 98 per cent of the insurance industry while Autif is the mouthpiece for the vast majority of unit trust and Oeic providers. In targeting financial services consumers, they are essentially vying for pieces of the same pie.

One commentator says: “Trade associations spend all their time trying to differentiate themselves from groups in the same sector.

“The ABI and Autif are roughly in the same market and are fighting for prominence in that market.”

Both the ABI and Autif deny any dispute exists, preferring to say they are simply debating issues in public and, in fact, the two organisations get along just fine.

ABI spokesman Malcolm Tarling says: “The ABI and Autif talk about a whole range of issues. We regularly have public debates. No two organisations are going to agree on everything 100 per cent of time but it would be wrongto say that there is anydegree of hostility between our associations.”

Autif director of communications Anne McMeehan says: “Constructive criticism is a good thing – no one will dispute that. Our differencesover individual issues are not indicative of the relationship between Autif and the ABI.”

But looking at recent comments from outgoing Autif director general Philip Warland, one cannot help but come away with a different impression.

In a speech two weeks ago, Warland said: “I was astonished to see the comments of my opposite number at the ABI the other day, when Mary Francis apparently said to the economic secretary that the Government should stop interfering in product manufacture and let the industry get on with it.

“If her industry had a 10-year pristine record, then she might have a point.

“I, too, am a believer in the Government only interfering where it is strictly necessary for it to do so but it is difficult to think of a clearer public policy case for Government intervention than in the area of pensions where so much public confidence has been lost.”

Francis took an aggressive stance in her challenge to Treasury economic secretary Melanie Johnson when she said the Government must remove itself from the design of financial products.

In a speech at the Labour Conference in Brighton, Francis said: “The lesson of the Millennium Dome is that Governments are not experts at designing and selling and marketing.

“Yet our Government has got pretty deeply into designing financial products – Isas, IPAs and stakeholders.

“Governments too often succumb to complexity and overdesign, especially where tax is concerned. The lesson for the Government is now to stand back and let the ind-ustry take forward the task of designing simple, access-ible products.”

Tarling points out that Francis also said Government intervention in the past had been a good thing.

He maintains Government involvement has been beneficial and has served as a necessary spur to the industry.

But only a year ago, Warland slammed Cat standards as being “breathtakingly irresponsible”. Now he appearsto have reversed his stance and is supportive of Government standards.

But since then his tone towards Government initiatives has been much more conciliatory, and perhaps not without reason.

The latest twists to the argument come hot on the heels of the Government&#39s proposals for Individual Pension Accounts.

IPAs have been designed to provide unit trust managers with greater access to the pension market by giving them tax breaks with a concession on stamp duty reserve tax.

But while the Government has tried to give Autif members an equal footing with insurers in the market, the ABI has criticised the taxconcession on IPAs, saying it creates an uneven playing field. Autif says the move does not go far enough and wants more.

McMeehan says: “This is a very competitive industry. Such is the desire to protect market share, the entry that might be deemed imminent by the unit trust industry into the pension industry might be a cause of concern to some.”

The IPA regulations are yet to be finalised. Clearly, the ABI wants changes to be made and, just as evidently, Autif is going to dig in its heels, resist any changes and, more likely, lobby for more concessions.

Tarling says: “We believe there should be a level playing field. We are not asking for preferential terms. We do not want to see one form of savings vehicle having an advantage over another.”

Another bone of contention has been the ABI&#39s Savings and Long Term Risk initiative launched under the Raising Standards banner. The move is an attempt to improve standards across the insurance industry but has received mixed reviews from industry observers and some product providers.

While applauding the motivation behind Saltr, Autif has been unwilling to endorse the initiative publicly.

McMeehan says this is because, while the association represents the interests of companies supporting Saltr and will help them take the steps towards acquiring accreditation through it, there are also Autif members which are firmly opposed to the idea.

There is not necessarily anything wrong with the two trade associations airing differences of opinion in public. For members, it is a sign of them acting vigorously on their behalf.

It also forces the Government to sit up and listen to the concerns of the industry.

And it provides the rest of the industry with ongoing entertainment. The ball is now in Francis&#39 court. What will she come up with next?

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