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Year to Year: 1988

The year can be split before and after Clowes but this division did not appear until June. The start of the year saw the final version of Fimbra’s rulebook published and news that P-Day had been set at February 27.

January saw the first 700 applications received by fledgling IFA trade association the National Federation of Independent Financial Advisers – Nfifa. And the personal pensions boom was under way, even though the legislation making them possible did not become effective until July. Michael Portillo, then junior minister at the Department of Social Security, warned pension providers to desist from advertising their wares before the July start date.

In February, the Prudential unveiled its response to the new pensions opportunities with a £7m campaign. Meanwhile, Colin Cochrane’s problems with Fimbra came to a head, with a spot check by the SRO leading to allegations that his firm, Family Assurance Services, was operating without properly audited accounts.

Burns Anderson chairman John Harvey-Jones launched a nationwide IFA network, providing marketing and admin support for its member firms in return for a slice of their commission. It was swamped with applications. Networks would prove the way of the future for many small IFAs.

Fimbra counted the application forms received in early March, and it looked like starting life with about 11,000 members. The OFT delivered a major shock later that month when it recommended to trade secretary Lord Young that hard disclosure of commission be forced on the industry. Money Marketing immediately campaigned against such an imposition. And Nigel Lawson limited the Mortgage Interest Relief at Source on house purchase to £30,000 a property.

The collapse of Barlow Clowes’ gilts operation was MM’s lead story in the June 9 issue. It was clear that many IFAs had put client’s money into Clowes Gibraltar-based gilts fund. IFAs looked initially to be responsible for placing about £12m of the £130m lost. Fimbra councillor and former LIA president Chris Leach said that on the evidence available at the time, putting client money into Barlow Clowes was best advice. There were calls to unseat Leach at the next Fimbra AGM.

Meanwhile, Nfifa chairman Geoff Kangley had just joined the SRO’s governing body. With a major shakeup of the council in the offing and one of Fimbra’s perennial funding crisis about to reach a head, the Fimbra AGM in October was shaping up to be a lively one. Fimbra’s cash crisis had led to plans of a merger between it and Lautro but this fell through and a group of life offices led by Imag came through with a £lm-plus bail-out.

There was a hint of the pension transfer scandal to come in September when Norwich Union and Scottish Amicable were attacked for using erroneous quotes when persuading clients to contract out of Serps. And futures Group LIT Holdings paid Roger Levitt £l1m for a 24.5 per cent stake in his firm, valuing the Levitt group at £45m. When the Levitt group collapsed in December 1990, the spotlight would be directed at some other interesting investors. And Camifa announced plans for the creation of IFA Promotion.
Merger fever was also in the air as Llodys and Abbey Life and London Life and AMP started their respective courtships. Meanwhile, Fimbra’s problems continued as it planned to raise member’s fees by a third.

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