Aifa: don't rule out passporting ahead of RDR

If RDR continues to be pushed through, expect passporting to happen in a big way.

It would have been better if AIFA had devoted its energies to fight the FSA 's imposition of these possibly illegal and anti competitive RDR conditions.

Many IFAs like myself who have been in this business for decades (20 as a competant, prudent and sensible IFA) , now approaching retirement should not have to undergo the indignity and stress of having to re-qualify for a job we have been doing well for all this time.

I am glad I did not join AIFA as its approach to and aquiescence to this draconion change of status for IFAs who maybe do not have too long to go before retirement, as well as its acceptance of the destruction of a method of remuneration by commission to assist less well off clients to have access to IFA services, is a betrayal of those who pay their fees.

How any organisation, purported to represent IFA member interests can propose such a convoluted arrangement is beyond my comprehension.

AIFA should be mounting a legal challenge to these impositions, which are neither in the publics or the industry interest and as there are clear doubts about the potential benefits to the consumer as expressed in the FSA executive meeting of the 25th March this year, I wonder what planet the directors of AIFA are on.

IFA Members should immediately resign from this ineffective pussy organisation and demand their money back.

Probably better to just leave the country permanently?

Successive governments have done absolutely nothing to prevent another "brain drain".

I know of a couple who moved to UAE some time ago and earn in the region of the equivalent of £250,000 tax free each year. I am sure that everyone else will know of other similar examples.

And here we let the FSA trample all over us and let HMRC take what's left.

Legislation has done nothing to encourage anyone to stay in the UK and to try and better themselves, and it is time that the powers-that-be recognised that.

Or am I just a cynic?

The Direct Debit to AIFA will be cancelled to-day

Dave, your not a cynic at all,your thinking what everyone should be thinking.

Ive just been outside and checked my office door,my desk sign and business card and theres nothing on it to suggest I am a registered charity.....as a business owner who just suffered a huge increase in PI cover along with an increase in my excess (double) a potential reduction in commision and fees further down the line I have to consider whats in this job for me.

I come to work to build my business,increase revenue and provide for my future,nothing more and nothing less,Im no different from an accountaant setting up offshore tax structures for fees in return for saving clients money.The facility to set up offshore is there and avilable for IFA's to use legally.

Each and every opportunity which presents itself and allows us to legally take advantages of legislation should be used.For those who wish to stay and operate under the FSA and various other bodies should stop moaning,they have a choice and there is no one forcing them to stay and operate under the current regime.

I also read on other threads today about IFA's working abroad being nothing more than carpet salesman,well I can say there are plenty still left in the UK who fit this description,usually affilated to large organisations flogging insurance policies and bonds to clients trying to deposit and draw money from their accounts.There is good and bad everywhere,onshore and offshore so its no good labelling everyone offshore the same,the IFA's who move offshore maybe doing it for tax reasons never mind the obvious FSA regulation

I have to say that i will move abroad in the very near future,if not to escape regulation then to escape the rediculous tax burden placed on us who are in the top 5% of earners in this country.

Yours

Heading for a tax haven and sun in the very near future (and proud to say so)

I cancelled my membership earlier this year. Until AIFA are prepared to mount a legal challenge to prevent 'unlawful' business closures and support the grandfathering process applicable to all other professions then in my view they are a complete waste of time. An entirley lame association incapable of representing our professions interests, being prepared only to offer soft response where hard challenge is required.

Maybe just easier to sell up and buy a 'normal' business for the last few years of employment.

It is the younger people I know who have left financial services not the older ones, I spoke to one for the first time yesterday who now works in a different industry, he transacts business in a similar way to us, however his paperwork is complete within 30 minutes, he earns £400 per sale, he is finding his feet but manages 3 per week.

In his words, he just couldnt understand why he tolerated the 't*****s at the FSA for so long, he told me I am mad get out, they wont know how crap they really are until everyone has gone.

Other younger ex IFAs are studying at a similar level required for this industry but in work where the salaries are guaranteed and the goal posts wont be moved every other year. One third of all of the advisers I knew were under 40 and have left, ranged between 28 and 39, one over 40 has left.

What we have is regualtor trying to run the industry instead of guiding it, and since they are civil servants who cant manage their own extortionate and ever expanding budgets, unsurprisingly they are failing.

Maybe the way forward is to bite the bullet on complexity once and get it over with instead of following the FSA lemming over the cliff.

Cameron did say he would listen and react to complaints about the FSA.

Maybe we all need to use the likes of AIFA to construct a well thought out and well worded complaint, then every single one of us send it in?

I agree about AIFA using all monies to try and challenge the forced changes.

On the basis of what has been scribed so far here, the two IFA's left in the UK in 2013 can expect quite a lot of inspection time from a body with a name still to be decided. However the upside will be millions of orphan clients that they will not be able to service because the providers will refuse to acknowledge they qualify as a client unless you know their inside leg measurement,star sign, blood group, favourite boy band and the name of their hair dresser.

On the other hand 3,000 companies will be operating from Dublin with one Irish client each all called O'Mally they do say adversity is the mother of invention and it appears more than several IFA's have just re discovered Irish relatives that was a stroke of luck begorrah, I'll have a guiness

They are AIFA'n a larf? Surely? Many of us pointed this out years ago but they said it wasn't an option, make your minds up!

From where I sit there are too many chiefs running around while Custer makes his last stand.

Under the RDR proposals the only passporting I will be doing is my clients to the institutions or their own devices, thanks FSA job done!!!!!!!!!!

To "anonymous 2":

Thanks for acknowledging my comments.

But sadly you are obviously uncompliant, as your stationery fails to mention the charity bit! But neither does mine, so I can't throw any stones on that issue.

But I empathise with your comments on PI excesses - not that I have ever claimed under such a policy.

And your other comments were well placed and relevant.

We could all however join the ranks of the ambulance chasers instead of taking all of this hassle.

Has anyone ever been mis-sold a pencil sharpener???

How will passporting look to new clients?

'I live just round the corner from you, but to avoid trouble with the regulator my business is based in Malta'

I have never had any dealings with AIFA but this is not the 'support' i would be looking for if I wasnt RDR ready.

Reading through these posts it is rather depressing. For example:

Ned Naylor. I could well be older than you. This year marks my 25th in Financial Services. What I don’t understand about your complaint is that it has been evident for at least 15 years that qualifications were on the agenda. Where were you? Behaving like an Ostrich it would seem.

As to commission. This again is purposeful misunderstanding. Sure commission is going, but the client can still pay via the product – it’s called adviser charging. If you have been relying on indemnity commission – then you never had a business at all – it was built on other people’s money.

Considering the two points above it would seem evident that your indignation is based on the fact that you can’t be bothered to fully engage with all aspects – particularly regulation. Perhaps a little more reading might help?

As to the other comments. Yes I do agree with emigration, but it has little to do with the FSA and more to do with the general state of the country. I too am sick of all this PC nonsense. The curtailment of enterprise. The suffocation of hard work. Ethnic Diversity – a sobriquet for untrammelled immigration. Idiots in government who are just out to enrich themselves and all the rest of the nonsense we have to endure. In truth the FSA is the least of it.

As to AIFA. Sure there are criticisms. But in the end, whether you agree or not they are trying to do the best they can for all advisers. This doesn’t mean tilting at windmills, but trying to do what is achievable. If you don’t recognise what they have done for you, then again you haven’t been paying attention. Just one (the latest) example – the FSA have agreed that the fee structure falls unfairly on us and our portion needs to be reduced. Who do you think achieved that – the Tooth Fairy?

While you are all whinging and cancelling subscriptions a far bigger danger is looming. Any organisation relies on its members for funding. If significant members opt out or become ‘restricted’ what then of Independence? It is always better to moan from within than from outside. If those who are now Independent don’t keep the faith then we will soon be back to a very fragmented situation, where no notice will be taken by the regulator of anything we say. We stand in danger of having trade bodies for Basic Advice, Simplified Advice, Restricted Advice and the Gold Standard – Independent Advice – with none having much clout in the corridors of power – so think on before you chuck the baby out with the bathwater.

Passporting back into the UK to 'avoid' the RDR is one of those throw-away comments we often hear from those IFAs who are doing their best to find their way around the new rules. It's a lovely suggestion, in theory. In practice, it is of course completely unrealistic.

Apart from how it would look to your clients, can you imagine the practicalties of dealing with a foreign regulator, in a foreign language? If you think that the FSA sometimes talks in Dutch, you would have more trouble translating the same documents in they really were in Dutch.

Besides, passporting back in from any country in the EU would be a delaying tactic rather than complete avoidance, as the whole continent is heading in the direction of higher professional standards now.

For AIFA to refer to the consequences of making a move like this as merely 'demanding' is disingenuous, at best.

Passporting IN -

Look, I am 66 and will be 68 come Jan 2013 - have been an IFA since 1973, 37 odd years -

the real travesty of all this nonesense is that all I need is just a few more years doing something that I love doing - who wants to suddenly stop when you have a super bunch of clients / friends. Re qualification for me, authorised through NASDIM, FIMBRA, PIA and now FSA is in all honesty too much - I am still capable and qualified to offer good advice to my clients.

It is a disgrace that the FSA and those running this country cannot see the folly of terminating all of us near retirement when we still have a lot to offer - and additional examinations will prove nothing.

I may consider 'passporting in' certainly if it is from Ireland and not too onerous - certainly my clients would understand the position and I might just be able to continue for a few years 'til I naturally just run out of gas - then I will pack up and retire gracefully -

After 37 years could they not just give me say 6 more years -

What the hell is going on with this country ?

Surely the irony here is that this article comes on the same day that the FSA has told a firm passporting in from Cyprus to stop doing SIPP business in the UK after "excessive charging" allegedly took place. If Passporting picks up steam, all that will happen is that the FSA or their sucessor will simply lean on the regulator of the country in question and stop the business going forward. If the regulator in question ignores them, then the FSA just needs to lean on the life companies not to sell to UK residents via non UK regulated advisers.

Ive already passported I work off the UK on the Isle of Wight??

"Ian, that's not abroad"

"You try walking there!"

Look, the RDR is about improving an industry which is in dire need of it. What is so bad about enhanced levels of qualifications (we are looking after people's life savings here), removing indemnity commission (ie a loan) and capital adequacy making firms more solvent?

If the nay sayers all have so much experience, the exams should be a doddle.

As for the Aifa and pasporting back to the UK. laughable if it wasnt so serious.

I share Harry Katz's depression at reading the majority of comments and Martin Bamford is one of the few who hits the right tone in his response. It is bad enough that IFAs should seek to take such extreme action to avoid operating what amount to no more or less than sensible business practices but for a 'Professional' trade body such ass the AIFA aspires to be it is to me totally unfathomable. It would be really heartening if just once our industry could devote the same amount of energy to moving with the reality of the times instead of wasting it in trying to hold back the tide liek some modern day Kinng Canute

I suspect many here are not actually complaining about "commission" or "fees" or even "qualifications" where they are needed, but the whole way the FSA and those who rule over us have implemented and imposed their ever changing ideas and added costs over the years. The FSA has nothing to be proud about and if we had imposed upon them a whole load of ever changing regulation and costs you can be they too would be unhappy, but they seem to be unaccountable to anyone or no "one person" or "body" takes accountability for them.

For Alastair to say they do not have "sensible business practices" in place is hardly fair either.

Qualifications should of course be encouraged and required especially for complicated or specialist areas of business but not forced upon people. RDR will not make make any adviser a good adviser simply because they have passed an exam. Look what G60 did for pension transfers as the FSA eventaully found out, too late as usual.

The reality is that as we do not have "one" powerful organisation to represent our needs at the "highest level" so we will never achieve what many want until we actually agree on "what we want" so there is little point in making any respresentation.

Personally I fear the ever increasing costs, the unknown compensation bill that is going to pass our way over the coming years, the fear that many will avoid advice and go online and not everyone can look after the wealthy.

We are already seeing contraction in the mortgage broker market as lenders decide they do not need brokers any more and offer better deals direct so will the same happen to everyday products I wonder via online services? Product providers will look for the most economical and effective source to sell their products and if IFA numbers decline then they will be less attractive to providers.

With Mr Hoban annoucing he is looking to introduce "simplified products" this may well hinder the need for advice, plus the "free advice" service we will all have to pay for?

I have my own ideas as I am sure many others do, of how I think we should go in the future. I did forward one different idea to CityWire but sadly they have not published it but it may have encouraged a debate on the matter. Beginning to think CityWire may have it's own agenda now and would rather it did not become biased one way or the other..

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Michael Fellas I agree with 100%.

To be honest the others who try to see positivity in the RDR I find little more than ignorant and the likes of Bamford simply trying to stay in with the 'right' crowd as any comments in the press against the FSA are always started with the phrase, I think many or some IFAs feel ......... rather than I disagree with .....

If the millions of bank advice complaints were dealt with and massive moves to eradicate these altogether were in place BEFORE any other changes, ie address the way bank adviser targets and sales etc operate, and reduced bank complaints no matter how misguided any new changes would be then the credibility of the regulator would improve, because the move would be clearly for consumer protection. Clearly at the moment consumer protection and consumer cost is last on the FSA's list. They also seem to try at every oppportunity to forget that if the public do not purchase a product or pay for real financial advice (not generic spoutings) then there has been no benefit to the wider public, no success. It would be the same as getting the message about motorcycle helmets out to everyone, measuring that as success rather than people wearing/purchasing them which is the real success. Ignoring the reality if you like. We were succesful because they heard us.

If their continual banging on and on in every transaction about cheap is best in every area of the financial services industry was led by example in their own regulatory costs, their office costs, expense costs and in every action they took to be super efficient and effective, then this would also improve their credibility. They want an industry to earn nothing and charge nothing while they go off in to the stratosphere on wages, expenses and luxury surroundings only afforded by the top offices of the best industries in the World.

If they, as an organisation who have deduced, from mystical data which appears fictional as it has never been shown, that qualifications are without doubt the way forward and then first made sure that they only employ people who have higher qualifications and experience of the industry, because afterall, they are the ones who make the rules and are supposed to be able to understand the work they are checking. How can you govern an industry, set regulation and judge the work of professionals with less experience and less qualifications than the people you govern over? They have to believe their rules and statements or not, which is it? If we can be sacked without qualifications then there is no reason why they shouldnt be too. So re apply for all of the roles. Clearly people at the very top could not be experts in each area they govern, but as a min each head of dept and below should be both experienced and qualified in their part of the industry as a min, bar of course secretaries and receptionists. Training is no good, they should set min HR standards upon employment.

It follows that the only person who could check if professional work was done properly are more highly qualified individuals, otherwise they are contradicting their own statements.

AIFA, of which I am a member, was ok when this was a sleepy little industry, now war has been declared on IFAs who only have 2% of consumer complaints and represent a tiny percentage of new compensation claims yet are suffering the most in the changes, clearly the IFA community need tough representation and it is good people are complaining about AIFA, that means they want them to change and will stay, when it goes wrong all will shut up and leave. Complaints are good, they can be acted upon, reducing membership is really bad.

Michael Fellas is spot on, apart from IFAs who are staying on an aquisition trail then sell out post RDR, of which some above have publicly stated their intentions, for the rest, it is economy of scale issues, once the power is with tied organisations you can be absolutely assured they will know how to extract better deals for them and enforce worse deals for us, we 'allowed' a provider to go in to Tesco with cheap costs subsidised by us, with no existing market share, you can be assured they will not allow that when they are in control.

Keydata and similar examples showed how much cost can apply to every adviser through one relatively minor failure, when there are less IFAs imagine how much the cost could be if someone large failed, it could potentially cost £1,000s of pounds per adviser.

All development of software, product and any assistance to IFAs will reduce if their market share reduces, the latest developments would move to the area of the industry with most market share, they all operate on cost and if the money isnt present to fund them, they will not be there. Thing is if 80% of the market reduces while the tied banks etc would increase market share, I do not see the overall turnover of business remaining the same, so further consolidation and reduction of choice is inevitable. Hardly an industry success story for the consumer.

The ombudsman is ecstatic about its expansion plans (watch their own video) the FSA does nothing to stem this ever expanding liability, the compensation scheme itself, which I admire them for, even spoke up about it's own concerns about potential future complaints if claims relative to complaints were maintained with the current increasing complaint levels, not from IFAs I hasten to add.

The FSA's RDR is built on sand, actually worse than sand, like Michael Fellas quite rightly points out most IFAs are complaining more about these foundations if the RDR was placed on hold and these were addressed first then just maybe the industry would have a little respect for such a runaway train that the FSA has become.

Two words cover it, 'consumers FIRST'.

The distressed IFA business are providing rich pickings for some in the approach to RDR, in the final year I can see businesses selling for 1 times recuring income or maybe even less, those feeding on these carcasses and shouting the merits of RDR should be seperated from those who want to advise for life and earn their money from working and not one off quick sales. The FSA are looking for the old sheeny suited rogues in the wrong places and forget that charm and credibility is how con men survive.

Thanks anonymous 3.

I have posted one idea on the citywire forum here (see "forum" at the top of this page) so would be interested to hear of others thoughts.

I think all the above comments demonstrate that diffrent IFAs have different agendas inasmuch as they have different clients banks and conduct their businesses in diffrent ways. What is wrong is the principle of the RDR preventing already qualified IFAs from practicing after 2012 without passing whoely irrelevant exams. As has already been mentioned, if the public require specialist IFAs they can have them, if they wnat GP IFAS they can have them as well. The option for Fees or Commission already exists.

So the question is, why have the RDR and the answer comes back loud and clear that The FSA is run by past banking officials and they are favouring the banks yet again. If this were not so, then they would have regulated the banks effectively, which patently they did not.

Apart from the above comments the RDR is going to cost around £500 miilion to introduce and around £50 Million per annum to miantain and for what actual benefit, none that I can see and if others are honest ,they cannot see one eiother.

AIFA will continue to lobby but, in the face of an organisation like the FSA, this will be of little value. The FSA's idea of "engaging with" and "consulting with" the industry or its representative bodies is to agree to a few meetings but, in practice, to reject anything which doesn't fit in with its already cast-in-concrete agenda.

The only option left to AIFA, ultimately, is what the soon-to-depart Chris Cummings (who has worked hard and sincerely but ultimately with only a couple of notable successes and now he's jumping ship just when we need him most) has described as "The Nuclear Option".

Given a choice between the Red Button and getting the hell out to a non-UK regulatory jurisdiction, most IFA's, I suspect, prefer the latter. From there on, the FSA/CPMA can stew in its own sour juice with a dwindling number of IFA firms from which to extort its ever escalating and largely misspent levies. As a steadily decreasing number of firms find themselves being charged more and more, no matter how RDR compliant they try to be (as has happened to Informed Choice), they too will join the exodus. So the future for IFA's will become increasingly a choice between being levied to bankruptcy or joining the ex-pat community. Apart from a few diehard pious zealots, who seem to have convinced themselves that the FSA and its loony RDR are actually worth continuing to support, who in their right mind would opt for the former?

Then and only then might the FSA turn its attention to the banks and even they will then defect to a non-UK regulatory jurisdiction. "Sorry, Hector, you've kept the heat of us for many years but what you're trying to do now just isn't acceptable, so tally ho, we're off."

Oh yes ~ I agree with the observations made by Michael Fallas. If ever there was a better example than the FSA's RDR of a plan to fix what, for the most part, ain't broke, whilst ignoring steadfastly what is manifestly the worst and most un-TCF sector of the retail financial services community, then I'd be interested to hear about it.