JOB OF THE WEEK

The last few days have been a busy time at AIFA and for me. AIFA's governing body is called the Council and we regularly ask them to make tough decisions and plan for the future of the professional advice community - our meeting last week was no exception as we considered the next stages of the RDR.

With the FSA RDR 'home team' changing so fast (Amanda Bowe, head of the RDR shortly to move on - following Callum McCarthy, Clive Briault, and Stephen Bland who've all either gone on or out!), we are keen to ensure that consistency of thought is not lost so have been reminding the regulator of what the consumer benefits of the RDR could be if it is properly pursued. We have also been reminding them that change costs money, and is unsettling for all involved - so some regulatory 'carrots' are needed to keep up the momentum and reward positive change. There is no doubt that investing in people costs money and there needs to be clear 'regulatory incentives' to help firms better afford this cost - a reduction in FSA fees for firms who are investing in training sounds like a good approach to me. After all, a better run, more professional firm will be a lower risk firm - and hence require less of the regulator's time and attention!

We are working on a 'balanced scorecard' to help FSA recognise good firms and so reward positive behaviour. This takes in many attributes - none of which will come as any surprise to IFA businesses. We are already well down the track with many of regulator's proposals - in fact the story of the last ten years is just how professional the IFA community has become. Through hard work, investments in training and development, better utilizing technology, and building regulatory practices into a client-first culture that existed anyway, the IFA profession has arrived at a position where 98% of clients trust their IFA more than anyone else for financial matters.

This journey can now be recognised and the RDR presents an opportunity for FSA to establish the IFA profession as the premier division in financial services. A prize worth fighting for!

We are coming up to election time again, and, if you are interested in making your views heard, want to play a major part in shaping the future of the profession, and can dedicate sufficient time to the task, I would urge you to stand at these elections. Council meetings look at business, not just regulatory, issues to assess the future of the sector so our scope and range of discussions often surprises new-comers! For more details on how to stand for election, do contact me today.

FSA has revealed that 13% of larger firms met the end of March TCF deadline. This particular milestone was for having management information in place to evidence they were Treating Customers Fairly. The regulator remains hopeful that 80% of firms will meet the more crucial December date that will prove firms can Treat Customers Fairly.

Of course, it is true that those firms who missed the March deadline may not be, as FSA points out, actually failing to treat customers fairly - simply that their MI does not show it to the regulator's satisfaction.

What can we glean from this work and what are the lessons for regulator, industry and, most of all, consumers?

First, there must be a review of how the TCF message was communicated to firms. A 13% satisfaction rate is worrying for all concerned. These firms are those who are relationship-managed. They have regular dialogue with FSA, and this enables them to regularly check a proposed outcome and the journey towards it with the regulator. One of the National Audit Office's observations when it reviewed FSA was the advantage firms had if they were relationship-managed. Yet, these are the firms who have faired so poorly.

The lesson for firms is a tough one... Obviously they have much to do if they are to meet the December deadline. FSA hopes that 80% of firms will make its end of year deadline - so are there 20% of firms who the regulator thinks are a lost cause? What are these firms to do? Are they going through enforcement? What is the consumer to make of all this?

Also, it is important to remember that smaller firms were not reported on - and these tend to be intermediary firms. AIFA worked with FSA to produce a set of Good Practice notes on the TCF management information requirements. We also surveyed members on their preparedness for the end of March and our findings were very encouraging. We also had good reports from members who had used the guidance notes. Given that the FSA usually reports intermediary firms make rapid progress when given help - if your firm isn't using our TCF guidance - it's not too late! Copies can be found on the website.

Finally, what should consumers make of all this? I think a quick perusal of the latest complaint figures from FOS added to this piece of news, paints a very clear picture of who to deal with in financial services! At a time when the IFA profession has seen its market share increase to 67%, and its complaint figures plummet to only 4%, consumers know who to call. They can deal with the big battalions, who seem to be running into TCF problems and who generate the lion's share of all complaints received by FOS or they can rely on an IFA profession focused on delivering excellent service to them over the long term. Tough choice, eh?

Well PIMS came and went - and what a terrific event it was this year. Lots of interesting speakers (BJ Cunningham was truly inspirational!), good debates, and more meetings in three days than an average three weeks!

Member feedback was universally positive. It's the first time I've had non-members come up to me and apologise for not being members of AIFA,  so the application forms I took quickly vanished. Some people even completed them there and then and membership packs are being sent out now! The main topic of the debate was the RDR, with a consensus that this could be the making of the IFA profession - seeing us recognised as a profession to be nurtured, developed and more valued than we are today! 

There was also a feeling that banks and other players should take the opportunities 'sales' offers them - with the consumer opting for a quick product-sell. This seems to offer opportunities that play to the larger financial institutions' strengths and they should focus on making that work rather than derailing the 'advice' proposals, which are so clearly going to benefit consumers.

Back on dry land meetings continued on the credit crunch and exploring possible solutions to it. As Sir James Crosby is about to present an interim report to the Chancellor, much speculation abounds as to what may be  amongst his first-stage findings. Members will know we have been busy   coming up with solution of our own and have presented these to the Treasury, Bank of England and FSA. Our discussions with Sir James have been good but far more work needs to be done.

On to the subject of money - the regulatory invoices will shortly be landing on the proverbial doormats. Firms have shuddered at the thud these have landed with in recent years as the FSCS levies were growing at an alarming rate - reaching £1,220 per RI last year (A13 fee block figures). This year the thud will be considerably lessened thanks to the much lower FSCS figures.  Following two years of very intense lobbying by AIFA, the new compensation  scheme system comes into effect and members will see a dramatic reduction  in their payments.

While the 'behind closed doors' nature of our work means we can't always be as vocal as we'd like (it's better to be influential than just loud!), results like  those achieved in the RDR and FSCS review easily demonstrate the value of  AIFA membership!