This enraged the independent sector, with the ABI, Biiba, Nfifa, IFA Promotion and Fimbra protesting against the report’s views. But the following week the Watford Group of nine top UK life offices said it would implement the proposals.
In May, SIB, Lautro and Fimbra recommended own changes on standard illustrations as an alternative to cash commission disclosure. The Labour Party even called for a Commons debate on the subject. At a Money Marketing/IFAP satellite TV debate, IFAs tore into Consumers’ Association head of money policy Jean Eaglesham, who defended hard disclosure.
A survey of 2,000 brokers by Money Marketing showed one in four IFAs would quit the market if the OFf plans went ahead and only two per cent would move to fee-based advice.
IFAP sought to persuade MPs that hard disclosure for IFAs only was wrong. In response to the OFf report, Chancellor Kenneth Clarke said disclosure of commission in cash terms at the point of sale would apply to all distribution channels. Clarke set a deadline of the end of the year for SIB’s draft report on surrender values, illustrations and differential pricing and for approval by the OFT and the Treasury of SIB’s commission proposals. The implementation of “hard disclosure” was to be from the end of 1994.
Meanwhile, the PIA saga continued. In January SIB chairman Andrew large wrote to the PIA and Fimbra demanding a “step change” in regulating standards. The letter, which proposed a £10,000 minimum capital-adequacy requirement for all
IFAs blew apart the fragile consensus that existed in favour of the PIA and gave the save Fimbra campaign a boost.
In September, Rathbones marketing director Michael Bryant said PIA’s plans to open for membership before Fimbra members voted on whether to join was “regulatory blackmail”.
Fimbra councillors attacked the £10,000 capital adequacy requirement as part of a hidden agenda to drive small IFAs out of business. But this was soon overshadowed by the shock departure of PIA chairman Downey. According to senior regulatory sources, Downey left because of a feud with SIB chairman Andrew Large.
Fimbra chief executive Godfrey Jillings told IFAs at the first Fimbra roadshow that PIA was the only alternative open to them. He also wrote to anti-PIA campaigner Alan Harris asking him to call off his save Fimbra campaign. Harris, who was elected to the Fimbra council on an anti-PIA platform, said initially he would not abandon his campaign. But by November Harris and Bryant threw in the towel, after Fimbra roadshows showed that IFAs now saw PIA as inevitable.
The future of Jillings was questioned in October, when PIA chairman Joe Palmer planned to ditch the deputy chief executive posts, occupied by Fimbra chief executive Jillings and his Lautro counterpart, Kit Jebens. SIB head of retail markets Colette Bowe was appointed PIA chief executive, replacing acting chairman Bill Barron, from January 1 1994.
The year ended with howls of outrage at the outcome of the trial of Roger Levitt – 180 hours community service. Fimbra called it “perverse” and “disgusting”, while MPs called for a drastic overhaul of the prosecution system and City regulation.