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IFA Centre hits out at Sifa's restricted advice move

by Michelle Abrego on Jan 02, 2013 at 13:55

IFA Centre hits out at Sifa's restricted advice move

Independent adviser trade body IFA Centre has criticised Sifa for opening its doors to ‘restricted whole of market’ advisers, claiming the move ‘means nothing in regulatory terms’.

Sifa has announced the move in response to the Financial Services Authority’s change to its criteria for independence, moving from a definition based on a lack of ties to a third party to one focused on the scope of services offered. It said that basing membership on the new definition would have excluded some firms which are independent ‘in the dictionary sense of the word’.

IFA Centre managing director Gill Cardy (pictured) said: ‘Restricted whole of market means nothing in regulatory terms.  It is restricted advice.  And independent means independent.  IFA Centre is not agnostic. I am not and my members are not. 

‘As of Monday 31 December 2012 there are two words that matter and that differentiate the advice that clients receive: independent and restricted.  It is a binary choice - not 50 shades of grey.’

Cardy added that Sifa’s move, following the Association of Professional Financial Advisers to accept restricted members last year, meant that the IFA Centre was ‘now, without any shadow of doubt, the only trade association representing and supporting only independent financial advice firms and independent financial advisers’.     

23 comments so far. Why not have your say?

David Bosworth

Jan 02, 2013 at 14:20

What a load of semantics ?

Just because you are restricted doesn't mean you cant give independent....apologies i mean whole of market advice on all the areas you deal with. Having spoken with clients it just is not an issue. For the parts that you cant advise on you can refer. Another great idea by the regulators !

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The Patriot

Jan 02, 2013 at 14:27

SIFA move with the times. It is a sensible strategy, why would they eliminate themselves from an increasingly large part of the advisory marketplace. Solicitors (and Accountants) want to deal with companies who will be around in years to come and where service and professionalism mean something never mind the 'tag' the adviser is given. With respect I have worked for many IFA's and many of them refer the majority of their work to the bigger poviders in what is largely a restricted environment anyway. Well done SIFA - common sense decision

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Keith Cobby

Jan 02, 2013 at 14:41

I agree with the previous comments. I don't think the public understand nor care what people are called. If they don't like the service they will walk.

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Simon P via mobile

Jan 02, 2013 at 14:56

The FSA made a mistake with how they are labelling services and IFA centre and some IFAs are desperately clinging to this 'independent is best' nonsense when everyone else realises that it is just a label and the important bit ( in my opinion) is that advisers aren't contractually tied to a provider. Restricted whole of market isn't a regulatory term but is easy to explain to clients who want assurance that you are not in the pocket of a provider. IFA centre seem unable (or unwilling) to understand that restricted doesn't necessarily mean tied. A good, value for money service from a trusted adviser is what most clients I see value above any 'label'.

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Jonathan Kirby

Jan 02, 2013 at 15:02

Although we are retaining the independent tag at least for the time being this just shows up RDR for the shambles it is.

Impartial advice need not be seen in the same light as tied to a panel or tied to one provider, both of which are inferior in terms of client choice.

Had the FSA got the gumption to do what is right then they would have made a distinction.

But no, the only conclusion you can draw is that they thought they were doing their pals at the banks a favour by trying to pretend that they would be on a level playing field with most IFA's in the 2012 sense of the word.

Instead they have now allowed an even worse situation to arise.

The banks will still sell, still get paid commission, but won't advise and therefore will not be responsible as it will be caveat emptor, not advice.

Shambolic doesn't begin to cover this reckless travesty.

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Christopher Petrie

Jan 02, 2013 at 15:38

Hello! 3pm on the first day of term...and the Usual Suspects are off and moaning about RDR again!

Actually, I was surprised this morning - the sun rose in the East as usual. I was expecting hail, brimstone, maybe the Mayan end of the world just a few days later than suggested.

In fact, a couple of clients have phoned and - well, nothing much different at all really.

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ian muirhead

Jan 02, 2013 at 15:43

SIFA has no wish to tangle with IFA Centre. We have different roles to play, SIFA is essentially a support group for IFAs who work with the professions, and the the fact that we are recognised by the FSA and the Law Societies and therefore fall be be described as a trade association simply reflects that fact that we are pleased also to have been able to contribute to the dialogie between the regulators.

The flaw in Gill's statement is "independent means independent". Regrettably, this is no longer the case in financial services, where courtesy of the FSA the word now means somethiong other than the dictionary definition. Since there is very little likelihood that the FSA definition will ever be understood by the consumer, SIFA prefers to stick with the true sense of the word - i.e. being free from the influence of third parties. This is the meaning of independence which the SRA Code of Conduct applies to solicitors' own conduct and we believe that it should apply also to solicitors' client referrals to third parties.

In our view, independence as re-defined by the FSA is no longer the criterion of professional conduct. Hence our decision to substitute the synonym "impartial" as our strap-line - a word which is well understoood both within and outside the profession and, most importantly, by consumers.

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Jonathan Kirby

Jan 02, 2013 at 16:05

@ Christopher Petrie

The following is a genuine email received on Monday from a client which I think demonstrates exactly why we have been and will continue to moan about RDR.

Hi Joe,

I picked up what appears to be some alarming news on the national news headlines this morning. I understand that the government through the FSA has suddenly decided that as of today all financial advisers will no longer be able to be paid through commission from products taken up by their clients, but will have to charge an up front fee to clients for all advice work. Is this true? It was a total surprise to me as there doesn't seem to have been any discussion in the media or from government, neither has any information been forthcoming. It appears from the news report that the government has just decided that this is in the best interests of customers. I can understand that the FSA wants to cut out any fraudulent selling to vulnerable people, but It seems to me that not only are they interfering with the millions of people like us who have a good and trusting relationship with our independent financial adviser, but they are also taking all choice away from customers who are perfectly happy with the status quo! In many cases this may well mean that only the rich will have access to good quality independent financial advice in the future.

Where does this leave us? I know that you receive annual commission on some of the products you have sold us. For example my draw down pension investments, which we are due to review in February for the first time I believe. Does this mean we will need to pay you an annual fee for these? if so how much is it likely to cost? Presumably this also means that any further investment advice we need from you, will have to be financed by us paying an up front fee, instead of through commissions on the products we select?

It seems to me that this is yet another case of a government and the FSA being completely out of touch with the impact of their actions upon ordinary people and families. I have no doubt that you may be getting lots of emails about this from your other clients. If you could let me know if I have understood the situation correctly and what our own situation will be as soon as you can, I would be grateful.

Happy new year by the way!!

Best wishes

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John Invest

Jan 02, 2013 at 16:47

The main problem as I see it with the "Restricted Label" is that some advisers will be significantly restricted and only dealing with a few providers whilst others will deal with a very wide range of companies. How will the poor consumer be able to differentiate between these 50 shades of grey as Gill Cardy describes them?So much for all the transparaency we were promised with RDR! I am sure the bosses at SJP will be lauhging all the way to the bank.

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Jan 02, 2013 at 18:01

I agree with Gill & John. It isnt about semantics. It is about what is best for the client. It is true they won't know the difference between IFA & "restricted whole of life". But they also wont know the difference between "restricted whole of life" & "restricted SJP". And neither will a lot of solicitors! It has to be pretty much black or white for a client to understand who they are dealing with. I really cannot see any excuse for not being IFA except for adviser laziness (not prepared to get some CPD to understand the esoterics) or choosing a self serving business model e.g. SJP.

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Christopher Petrid via mobile

Jan 02, 2013 at 19:21

@ J Kirby

With respect, maybe if your client had received a letter from their IFAs, rather than reading about it in the press, they would have had no worries.

Our clients are getting a long but clear letter explaining the new rules. They also get the new client agreement. Pleasingly, they all seem to be returning the signed Acceptance page.

Talking to your clients, its what we all do anyway.

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Jan 03, 2013 at 08:31


Probably it will be good to publish a guide of what 'restricted, whole of the market adviser' means. In my opinion there is not such thing, so all the debate is for nothing.

Ties are created in lots of way. I have looked yesterday at an 'IFA' website and they only have a link to one platform, one of the expensive ones. I doubt that for all their clients this was the best solution. But it is also true that platform offers a lot of tools for free, for which that firm would have paid for if not using it. Is that creating a tie?

What the FSA did was a good thing. It has explained what independent means: to do a fair and comprehensive analysis of the relevant market, based on unbiased and unrestricted research.

Otherwise you can only be restricted, whole of the 'half' market. I would first start you guide with a set of due diligence questions for the whole of 'half' market advisory firm to see why they are not independent. You don't need to ask too many questions to find the ties.

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Alistair Cunningham

Jan 03, 2013 at 08:43

Does this mean SIFA are to up the minimum entry requirement from Level 4? Level 6 would seem a good point as this puts Financial Planners on a par with Solicitors?

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ian muirhead

Jan 03, 2013 at 09:04

It's as well to remember where this whole saga started out, as far as concerns the SRA decision to permit solicitors to refer clients to all financial advisers regardless of status. The decision was based mainly on the fact that maintaining the requirement for "independence" post-RDR would have obliged solicitors to abandon their relationships with stockbrokers, most of whom do not advise on life and pensions and will therefore be classified as restricted. Consequently, the term "independent" has ceased to be applicable as the differentiator for solicitors' client referrals. However, SIFA's view, which accords with that of the Law Society, is that the principle of conflict-free advice which governs solicitors' own conduct, should be maintained. Hence SIFA's adoption of the term "impartiality", which has only one meaning, whereas "independent" now has two - the meaning ascribed by the FSA, and the meaning defined in the dictionary and understood by solicitors and clients alike. Most importantly, it excludes tied and multi-tied advisers, whose advice, according to the SRA Guidance of July 2009, is conflicted by self-interest and therefore not in the best interests of clients.

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ian muirhead

Jan 03, 2013 at 09:21


Many SIFA advisers are already level 6 and a significant proportion of member firms are chartered, and the numbers are growing progressively. However, as you are aware, cultural affinity is as important in the solicitor market as qualifications.


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Jonathan Kirby

Jan 03, 2013 at 09:36

@ Christopher Petrie

Whilst I agree in principle with what you say, given the number of clients we have and the fact that the vast majority will be unaffected by RDR, (because we have been 'RDR friendly' since before the concept was dreamt up by the FSA), we have been talking to people as and when as a part of our normal reviews.

You will note this client's review is due shortly and he is completely reassured although he is writing to his MP in protest at government meddling.

The point of posting the email is that most ordinary people's concept is that RDR is a damaging restriction and something which is not needed.

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Charles Rickards

Jan 03, 2013 at 10:55

What is in a name? Surely what is important is that the service the client requires is being fully met by the person giving it.

I also feel that the FSA have muddied the waters yet again for consumers, albeit that it is easy enough to explain.

It may have been easier for only those to be remunerated directly by the client only to be called IFAs?

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Chris Holmes

Jan 03, 2013 at 10:56

@Alistair Cunningham

"Level 6 would seem a good point as this puts Financial Planners on a par with Solicitors"

No it doesn't.

I am Chartered and this is a Chartered practice, but try telling a lawyer that you are equally qualified.... Ian makes the point that it is not about qualifications, but about ethics and advice culture. This is a far better discussion to have with your peers in the advisory world.

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Alistair Cunningham

Jan 03, 2013 at 12:10

@ Ian Muirhead

My question more related to the raising of the SIFA entry bar, which according to your website is: "Independent" (outdated following this release), "Fee-Based" (minimum requirement from this week), "at least one RDR qualified adviser" (previous reference was level 4) and "a clean regulatory record".

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Alistair Cunningham

Jan 03, 2013 at 13:20

@ Chris Holmes - When you complete your Chartered declarations you are subscribing to a higher level of professional ethics. Whilst they be no higher than voluntary codes held by practicising advisers they are mandatory to be Chartered.

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Chris Holmes

Jan 03, 2013 at 15:00

@Alistair Cunningham

And I subscribe wholeheartedly to them. Still doesn't put me on the same plain as a lawyer, but it is a very welcome step in the right direction.

Whilst the formal code of ethics is - as you rightly state - only voluntary to SPS card-carrying RIs, don't forget that each professional body should have in place a 'fitness to practice' test and process. Any errant SPS-holder may find themselves in front of a professional discipline tribunal and have sanctions imposed... just like any other 'professional'.

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Christopher Petrie via mobile

Jan 03, 2013 at 16:42

@ J Kirby again (sorry to go off topic again)

So, now you say the vast majority of your clients are unaffected by RDR anyway!

So what was the point of your original grumbling comment? Come on, the worlds moved on now.

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Barney Stackhouse

Jan 17, 2013 at 12:38

Let's face it, the FSA created the 50 shades of grey area.

Most IFA's who are going 'restricted' are only restricting themselves from the 'high risk' parts of the market due to P I issues.

I have no problem with this.

The issue for the consumer/solicitor/accountant is to decide whether a former IFA who opts for a 'restricted' model and has chosen not be involved in the high risk/questionable end of the market,but still has access to everything else, can provide a 'better' solution to a client scenario than a 'restricted' say, SJP adviser who is in effect a 'tied' agent (as was under the old rules) and can only access the offering provided by the one company.

RDR/TCF was supposed to have made the situation clearer for customers - however, in time honoured fashion, the powers that be have swept away one set of confusing rules and regulations and replaced them with another.

Oh well, happy days, I think its incumbent on advisers to develop their own professional relationships with solicitors and accountants, and for those professionals to make their own decisions/due diligence on the validity of the offering provided by the adviser company they choose to get involved with.

In the past many solicitors and accountants have had terrible experiences with so called Independent Advisers in anything from advice standards to on-going advice/services being virtually non-existent.

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