OpinionMay 24 2013

IFAs must unite to take on Arch villains

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The Arch Cru debacle has been rumbling on for four years now with no sign of reaching any satisfactory resolution. The mess initially cost individual investors – and, consequently, advisers – some £20bn and all attempts to compensate those affected have faltered.

You might have thought advisers would want to continue trying to do something to recoup some of the cash. But sadly, many seem to have accepted that the money is gone.

This may be a result of advisers having been bludgeoned into lethargy by a spate of previous mis-selling scandals that penalised the many good for the sins of the few wrong-doers. Or maybe they are too busy cramming for exams or explaining a new fee structure to their clients. Whatever the reason, the adviser response to the scandal has slowly dwindled and is currently non-existent.

As one, the industry has sighed, rolled over, absorbed the expense (alongside the Mas subsidy, PI premium and whatever other bills you are expected to foot) and just got on with trying to earn enough of a living to meet the spiralling cost of simply existing as a financial adviser.

The initial mess has been proven to be the result of mismanagement and maladministration, rather than any mis-selling. Indeed Capita, the fund administrator, has already been held accountable by the FSA, although it avoided paying the fine through some legal trickery, arguing that the arm of the company affected did not have sufficient funds.

So why is there so little appetite for a fight from IFAs who have so clearly been unfairly treated?

I guess, in short, it is easier to moan than to actually do something. The adviser community seems content to grumble on rather than take action. At least, most of the adviser community. As you may have seen, Gill Cardy, through her trade body IFA Centre, is currently trying to do something, but has been met by a predictable wall of apathy in trying to whip up the adviser interest she needs to get a legal challenge off the ground.

Gill already has a top London law firm – Harcus Sinclair – on side, which has vetted the case and judges it sufficiently viable for them to be willing to take it on.

The campaign will need numbers of advisers to support it and, as well as battling to attract their interest, Gill is also trying to generate awareness in the media and among politicians.