On the day when the Financial Conduct Authority bigwigs found themselves on the defensive on the RDR in front of the Treasury Select Committee, I am put in mind of the other bodies that were deemed culpable for the rules passing in their current form: trade bodies.
The Association of Professional Financial Advisers, or Aifa as was, bore the brunt of this opprobrium for giving tacit support to the regulator over the broad tenets of the rules, which many advisers themselves were vehemently against.
This, of course, led to many asserting that the sector needed a strong trade body to represent it. Could it be, however, that the truth is the adviser sector does not in reality care enough about having such representation to achieve this end?
Recently IFA Centre, the nascent trade body founded by Gill Cardy to bang the drum for independent advice in a market that was diverging, closed despite seemingly being popular among many of those it sought to represent.
I’ve also recently been given reason to believe Apfa is not as representative as might appear to be.
Speaking to FTAdviser, Alan Lakey, partner at Highclere Financial Services and an Apfa council member, told me that he believed Apfa would “collapse” if networks bulk membership was taken away from the trade body.
Neil Liversidge, another Apfa council member, came close to agreeing, saying: “If networks weren’t members of Apfa it would not be commercially viable. I wouldn’t say it would collapse but it would be a scaled down operation.”
I must say Apfa was less forthcoming, saying only that its members accounted for between 60 per cent and 75 per cent of registered individuals.
When pressed, Chris Hannant, Apfa director general, refused to disclose to me even ballpark membership figures or a rough split between network members and those that were directly authorised. He said this would be a “waste of resources”.
Because of Apfa’s defensive attitude, I can’t help thinking that Mr Lakey is right.
Network Openwork is an Apfa member and Philip Martin, its marketing director, confirmed that appointed representatives become Apfa members via default.
He said: “ARs can either opt in or opt out but why would they opt out when they get all the benefits of membership for free? We were the first restricted network that joined Apfa and we are behind it.
“Post-RDR the barriers between independent and restricted are winding down. Years of adviser division should be over and everyone should unite behind Apfa.”
Steve Young, commercial director at Sense said that networks are charged a fee based upon the number of advisers that they have. For example, a network with 500 advisers might pay around £30,000 pounds a year for membership.
He said: “I suspect that the big networks have special deals with lower charges and they are normally invited to join the [Apfa] council in recognition of what they pay.
“I guess that individual networks have different policies. Sesame always charged members for Apfa membership but gave them the right to opt-out. Some may include it in their fees.”
Sense, for the record, is not a member of any trade body.
I should add the FCA was equally coy when asked for a breakdown between network members and directly authorised figures. But that’s somewhat less surprising given the criticism they continue to get over their adviser data.
Mr Liversidge suggested more advisers are now “waking up to the fact that they need a strong trade body”. But are they?
Mr Lakey clarified that the problem with IFA Centre was the model itself, saying because it was trying to run campaigns such as that for Arch Cru compensation while also paying for itself it “wasn’t going to work”.
However, he said there remains a problem in the sector that “the number of advisers out there who can be bothered to do something as opposed to moan and groan is quite small”.
Mr Hannant said: “I would encourage advisers to join us. We are here - that’s self evident - we are a trade body for advisers, and we hope to secure a far greater share of the adviser market. We are open to networks as much as directly authorised.
“I would say we have beeen on a recruitment drive and seen steady growth over the last year. Intrinsic brought on their restricted guys and we have seen an inflow of members in the small and medium-sized businesses but we still have a long way to go.”
