CompaniesDec 11 2013

Protect the vital aspect of advice

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What should this tell you? That changes to how we are regulated (whether for good or for ill) take years in conception, formulation, consultation and implementation. This in turn emphasises how important it is to have a place at the table when changes are first contemplated.

My sadness in being forced to admit that the naysayers were right, that IFAs would never join a membership organisation representing independent advisers, is that this means that there will be no one totally devoted to the interests of the independent adviser sitting at these tables.

Many advisers who decided against joining IFA Centre explained that their professional bodies represented their interests. They do not. Their concerns, their lobbying, lie with professional standing, chartered or certified, not regulatory status, independent or restricted. I will never diminish the importance of professional qualification, but it is quite simply different to the decision to be independent or restricted.

Many discussions on this subject end up reverting to comparisons with other professions. I have concluded that comparisons with accountants and solicitors are flawed for one important reason: they only ever sell knowledge.

I prefer the comparison with medicine, where professional knowledge is intertwined (or maybe tainted) with the commercial world of the product provider. I am only too well aware that financial planning in all its variations is not about products, but the simple fact is that it is very rare for a financial plan to be implemented without products.

This is why IFA Centre’s campaign to ensure that product providers are held to account by regulators and made to pay for their failings is vital. Criticising colleagues for the quality of their advice detracts from the need to focus on the responsibilities of product providers.

I do not diminish the damage that poor advisers giving unsuitable advice has on the reputation of IFAs as a whole, and clients receiving poor advice must of course be protected, and compensated if necessary. However this must be treated as a separate issue otherwise good advisers will always end up paying for the inadequacies of product providers, through increased professional indemnity premiums, lack of PI cover, and increased FSCS levies.

The most disappointing aspect of the decision to close IFA Centre as a representative organisation is that everyone I met at the FCA, FSCS, Treasury select committee, All Party Parliamentary Group and in parliament ascribed huge importance to it speaking up for independent advice. More importantly they know, arguably more than advisers themselves, that IFAs need a strong, passionate and knowledgeable advocate.

They liked IFA Centre’s own independence, funded entirely by subscriptions from members committed to independent advice, not by product providers whose interests lay more in protecting their own commercial distribution channels by whatever means than the real interests of the advice community.

They liked the fact that my practitioner background meant I was well placed to assess and explain the implications of decisions on businesses and their clients than policy specialists with no advisory experience.

Do I need to spell out the threats to independent advice? Maybe I do.

Many argue that the regulator has an agenda to destroy IFAs and Europe has no IFA community that looks like ours. Advisers and firms are already being bullied and intimidated by a regulator that will not admit its own failings, by PI insurers threatening to reject claims, by Fos making ill-informed and irrational decisions.

This means that without someone arguing their corner IFAs, the vast majority of whom are one and two-man bands, will become invisible, an endangered species. Every other organisation, body, group or community speaks for advisers, not independent advisers. They will be conflicted when new rules favour one model over the other, disturbing level playing fields.

I valued independence beyond measure when I ran my own firm, and this is why I committed two and a half years of my time and career to standing up for independence when the pre-RDR feeding frenzy suggested that there was no future for independent advice.

If you believe that independence is a vital part of the advice landscape then you need to find out who will speak up, who will be your advocate, who will argue your corner, who will protect your interests in the long term. Do it today, before it is too late.

Gill Cardy is managing director of the IFA Centre