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.

Her drive to rope in some MPs to actively enact some change took a hugely positive step with a recent audience at Westminster, where all members across all parties were invited to a briefing in an attempt to alert those in the Commons to what had gone on.

This should represent progress, but instead of congratulating Gill, several advisers have chosen to ignore the success of arranging this briefing and focus instead on the identity of the MP who arranged it, as if George Galloway’s involvement in some way invalidates the entire campaign and proves all the ‘I told you it wouldn’t work’ doom-mongers right. (Continues on next page)

The self-styled ‘Gorgeous’ George is a divisive figure, but whatever your view of his politics, he is undeniably a conviction politician who will stand up for what he believes in. However repellent you may find his socialism, or uncomfortable his fawning as a guest of Saddam Hussein, or laughable his leotard-clad dalliances with the frothier end of reality television, he is an elected member of parliament, a product of the democratic process and, as such, deserves some respect.

He is also clearly an excellent representative of his constituents. Winning two elections as an independent candidate – without the big party machines behind him – can only be achieved through doing a solid job of helping your constituents with whatever needs and interests they have.

And representing his constituents is all he is doing here. His involvement came about because one of the IFAs affected happens to live in Galloway’s Bradford West constituency

Several high-profile politicians would probably be more relevant to the cause. John Selwyn Gummer is chairman of Apfa and Lord Howard Flight sits on Guernsey’s regulatory board. Both are ideally positioned to understand the issues and defend advisers’ interests. And as members of the House of Lords, both have the platform to advocate on behalf of IFAs. But we haven’t heard a peep from either of them on the subject. It is Galloway who has written to all 650 MPs – twice – to alert them to the issue.

Galloway may have his own agenda. That really doesn’t matter. If his involvement helps Gill, IFA Centre and the wider advice community to push their own agenda, it should not be a problem.

As Gill herself has pointed out, 4,000 puffins being under threat garnered quite a bit of press a week or two ago. Surely the plight of 20,000 human investors should be more worthy of column inches. But that attention, and support for the cause, will not just happen unless advisers help to create it.

IFAs are often found complaining that they are unrepresented and that nobody sticks up for them. They could do a lot more to help themselves when some support is on offer.