In the Centre for the Study of Financial Innovation’s 40-page report, Batting for the City: Do the Trade Associations Get it Right?, author Keyur Patel pointed out that there are 2,400 trade associations in the UK, at least 47 of which represent the “many thousands of institutions across the country that make up the financial services industry”.
However, he argued that their effectiveness was being diminished, largely as a result of an environment that has changed in two ways.
These changes were the creation of the European Supervisory Authorities in 2011, which has consolidated the “pre-eminence of European rules over national ones”, and the financial crisis, which led to “more punitive regimes under the Great Re-regulation”.
Mr Patel said: “In general, there is less space for trade bodies to promote their members’ strategic and competitive interests. The emphasis is shifting to what might crudely be called ‘damage control’: scrutinising and responding to the avalanche of rules put forward in Brussels and Westminster.”
Mr Patel also said that while there have not been many new entrants, there have “been instances of growing markets spawning their own representative body” in response to changing regulation. One example of this is the Peer to Peer Finance Association, which was formed in 2011. This was in response to a growing concern that the banks were not lending and financing had to be obtained from other bodies.
Another example is that of the IFA Centre, which was set up by Gill Cardy as a response to the regulator’s Retail Distribution Review, which created a distinction between generalist financial advisers and whole-of market, independent financial advisers.
Quoting a 2002 paper by academic David Lascelles, which argued that the City needed smaller, specialist trade associations as well as the large, generalist ones, Mr Patel said: “The need for specialist technical knowledge is more acute, with the sheer quantity of detailed regulation in the current climate.”
Adviser view
Gill Cardy, founder of the IFA Centre, said: “Our objectives are to preserve a healthy independent advice sector, for the benefit of independent adviser firms and their current and potential clients, and to be a cohesive organisation representing the interests of our members.
“We want to ensure that the voice of the independent adviser is heard clearly and unequivocally in UK and EU policy-making and that the business and trading operational environment for IFA firms now and in the future is fair and proportionate.”
Cross-reference to page XXX (Insider)
To read the full report, visit: http://www.csfi.org/files/Batting_for_the_City_by_Keyur_Patel_WEB.pdf
