Back in March, former Ofcom chief executive Ed Richards was appointed to review the possibility of a financial services trade body merger, and after an initial report in July, he has laid out the plans.
There are seven organisations in the scope of the final recommendation, with the Asset Based Finance Association to be integrated in a second phase.
Both the UK Payments Administration and Financial Fraud Action UK would also be ‘key partners’ for the proposed new trade association.
The Building Societies Association and Finance & Leasing Association have made it clear at this stage they do not wish to be part of the proposed integration and while respecting this view Mr Richards recommended a closer working relationship and more effective coordination.
“Our recommendation includes the creation of a brand new organisation,” read the report. “This will enable it to establish its own style and aspirations, to be established as an organisation for the full range of potential members, and to draw on the skills and expertise of all the existing trade associations.”
Across all plausible scenarios, the net present value of the project is “strongly positive”, with the report stating the net present value created for members is £32.6m over 25 years.
For the first three years and seven months, efficiency savings would be used to repay the implementation costs.
After this, the report suggests fees could potentially fall by up to 30 per cent.
Mr Richards explained the key governance feature is devolved policy leadership which enables each sector to have its own decision making board, but without reducing the overall organisation’s capacity to take an industry-wide perspective.
The report identified a number of activities which do not align with the core purposes of an effective trade association and that are currently carried out by existing trade associations.
“Our recommendation is that the new trade association would continue to perform these in the short term to avoid loss of service, but should quickly decide what type of organisation is best placed to take these forward,” it noted.
The paper also pointed out that the BBA and CML both have closed defined benefit pensions schemes. “While integration does not in any way affect existing pension liabilities, it is important that there is a clear understanding of the options available to deal with these,” stated the report, adding that buying out the existing pension schemes or ring-fencing the liabilities are presented as the credible options.