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Last week saw the deadline for responses to the recent CP 10/29 – Platforms: Delivering the RDR and other issues for platforms and nominee-related services and AIFA has published their response today.  

The main proposals suggested that cash rebates to clients should be abolished, re-registration should become mandatory and a wealth of required information must be passed on to a client who invests via a platform-like service.

AIFA are pleased to see that the paper also confirmed that FSA has acknowledged that many business models incorporate the use of platform services in a number of different ways.

Different usage, from single to multiple platforms, and from all clients on platform to a mixture of clients on platforms is correct as long as appropriate due diligence has taken place.

Ensuring appropriate platform due diligence has been completed and documented can be difficult and in order to assist our members in this area, AIFA has published a guide entitled Platforms and your business.

AIFA view

AIFA does not agree with the proposal to ban cash rebates to clients. FSA has stated that its rationale for this proposal is that it could potentially be used as a “commission-like” payment and the cost of ongoing advice could be hidden.

This appears to be an admission by FSA that Adviser Charging in itself will not provide sufficient transparency for consumers in the presence of cash rebates and this is of particular concern; this very transparency should be achieved by advisers agreeing with their client at outset the cost of advice; to suggest that this could be ‘hidden’ by cash-rebates is naïve.

A rebate from the provider to the consumer’s cash account would be clear and distinct from a pre-agreed charge of an adviser to their client. Removing choice and flexibility will only serve to stifle the industry.

In addition to this, AIFA is aware that FSA is carrying out further consultation on the disclosure of adviser charging in platforms and it would seem hasty and ill-thought to decide on banning cash rebates before this work has completed.

We are pleased to see that in-specie re-registration will be mandatory. This can only be a positive outcome for consumers and will increase choice in the market.

However, FSA has proposed alternatives to cash rebates (such as creating multiple share classes incorporating platform-specific discounts) and these will effectively remove the ability to re-register holdings efficiently from one platform to another.

FSA has also proposed introducing a requirement that those companies who operate a nominee related service should pass on all information from the fund manager to the end investor.

AIFA is keen to examine this apparent contradiction between the European PRIPs agenda and the consultation in the area of consumer information. 

Whilst FSA is proposing that nominee investors are provided with swathes of information, Europe’s PRIPs initiative highlights that consumers do not wish to see vast volumes of paper.

FSA has agreed that the information can be scanned and emailed to consumers and not necessarily posted, however this will still significantly increase costs and the only way these can be met is by the consumer paying more for the service.

The full response is available to download: AIFA response to CP 10/29 – Platforms: Delivering the RDR

Many thanks to those members who have taken the time to give input to this response since our initial communication back in November.

Jacqueline Thornton
Policy Analyst

two hours debating the Retail Distribution Review in the House of Commons, a debate which was secured by backbencher Mark Garnier, the MP for Wyre Forest.  

While the subject had been addressed briefly during the half-hour Westminster Hall debate secured by Harriett Baldwin MP in October, this was the first time the RDR had been debated in the main chamber. 

AIFA was therefore extremely supportive of the debate and grateful to Garnier and Baldwin for securing it. 

We had previously spent time briefing them, along with other MPs, of the implications of the RDR on the IFA profession and consumers, and in particular, the unintended and negative consequences of the reforms.  

Whilst AIFA supports the original six RDR objectives, we have vigorously campaigned for elements of the RDR to be reconsidered. 

We have, for example, consistently called for revisions to the implementation timetable and the removal of cliff edge dates, to ensure that access to independent, impartial advice remains accessible to all consumers and is affordable. 

We therefore welcomed these messages being put forward by politicians from across the political spectrum. 

Opening the debate, Mark Garnier MP stressed that the original objectives of the RDR were laudable but that “the devil is in the detail”. 

He went on to set out his concerns that many of the measures will disproportionately affect IFAs, including the new qualifications requirements and remuneration plans, and that ultimately consumers will lose access to their trusted advisers. 

Garnier also identified the risks associated with being an IFA, and called for the introduction of a 15 year long stop, a call AIFA has been making itself for years. 

This was followed by several similar speeches by other MPs in the chamber, including members of the Treasury Select Committee. In response, and speaking on behalf of the Government, Mark Hoban MP stated there has been a long consultation process when it came to the RDR. 

He said consumers must be assured advice is underpinned by good technical knowledge, stating, “high standards of technical knowledge will help advisers navigate clients through the complex choices they have to make." 

“While he recognised the debate around grandfathering he questioned how much experience is “sufficient” and covers enough products to give whole of market advice.

Hoban said he didn’t doubt the integrity of the vast majority of advisers but referred to example of past pensions mis-selling as a warning. 

He said adviser charging is needed to build consumer trust. 

Hoban also wanted on record the value he places on IFAs and how much he values his own IFA. 

He concluded by saying he believed the debate had helped FSA “understand the issues”.

Whilst Monday night’s debate highlighted the concerns of many cross-party MPs, it is also important that the industry develops alternative solutions, such as genuine competence assessments rather than examinations, that also work in the wider context – such as within age discrimination law. 

We believe our professional bodies need to do more in this area to bring pressure on the examining bodies.

Having raised the profile of these issues, the next step is to ensure we get constructive responses in front of the Treasury Select Committee in the next few weeks, who have invited written evidence on the RDR. 

AIFA will be engaging its RDR working party to ensure we embrace the widest opinions. We are also calling on members to submit their own written responses to the Committee – AIFA believes that members play a vital role in our lobbying, and delivering a consistent and constructive message to MPs will benefit our profession.   

The deadline for written evidence is 12:00 on Monday 17 January 2011, and submissions should be no longer than 2,000 words. 

Further details can be found at the following link on the Parliament website.

Katie Taylor
Political Analyst

Given the overriding importance of the new regulatory structure to the IFA profession, AIFA is pleased to announce that this week we have two important opportunities to contribute to, and influence, the debate in Westminster.

On Tuesday 19 October, AIFA has been invited to give oral evidence to the Treasury Committee as part of their enquiry into the future of financial regulation.

The Treasury Committee is an influential parliamentary select committee, made up of MPs from across the political spectrum, whose job it is to examine the expenditure, administration and policy of HM Treasury, with all of its agencies and associated bodies, including HMRC, the Bank of England, and FSA.

The Committee is chaired by Conservative MP Andrew Tyrie.
Director Robert Sinclair will be appearing alongside representatives from IFP and APCIMS to set out the perspective of the IFA profession and identify some of our key concerns.

This is a welcome recognition of the importance of the advice industry within financial services, and AIFA's position as the credible voice of the profession. Previous witnesses to this enquiry have included senior organisations such as the ABI, BBA, FSCS and FOS.

This is a certainly a good, not to mention high profile, opportunity to present and discuss the views of our members before this influential committee of MPs.

Judging from previous evidence sessions the Committee is particularly keen to look at the cost of regulation and compliance on firms, the threats and opportunities arising from the proposed new structures, and to what extent the CPMA should be a ‘consumer champion'.

The following day there will be a debate in Westminster Hall on the "Regulation of independent financial advisers", which has been tabled by Harriett Baldwin, MP for Worcestershire.

The RDR is likely to play a key part of this debate, and it is expected that Mark Hoban MP, financial secretary to the Treasury, will be in attendance.

Ahead of this debate AIFA has been invited to supply MPs with comprehensive written and oral briefings of our core messages, and key concerns around regulation and the RDR.

Both of these events are illustrations of how AIFA conveys our membership's key issues and concerns in Parliament and amongst other key policymakers on a range of areas.

AIFA strive to ensure our members are represented at all level of domestic and European policymaking.Given the overriding importance of the new regulatory structure to the IFA profession, AIFA is pleased to announce that this week we have two important opportunities to contribute to, and influence, the debate in Westminster.

On Tuesday 19 October, AIFA has been invited to give oral evidence to the Treasury Committee as part of their enquiry into the future of financial regulation. 
The Treasury Committee is an influential parliamentary select committee, made up of MPs from across the political spectrum, whose job it is to examine the expenditure, administration and policy of HM Treasury, with all of its agencies and associated bodies, including HMRC, the Bank of England, and FSA.

The Committee is chaired by Conservative MP Andrew Tyrie. 
Director Robert Sinclair will be appearing alongside representatives from IFP and APCIMS to set out the perspective of the IFA profession and identify some of our key concerns.

This is a welcome recognition of the importance of the advice industry within financial services, and AIFA's position as the credible voice of the profession. Previous witnesses to this enquiry have included senior organisations such as the ABI, BBA, FSCS and FOS.

This is a certainly a good, not to mention high profile, opportunity to present and discuss the views of our members before this influential committee of MPs.

Judging from previous evidence sessions the Committee is particularly keen to look at the cost of regulation and compliance on firms, the threats and opportunities arising from the proposed new structures, and to what extent the CPMA should be a ‘consumer champion'.

The following day there will be a debate in Westminster Hall on the "Regulation of independent financial advisers", which has been tabled by Harriett Baldwin, MP for Worcestershire.

The RDR is likely to play a key part of this debate, and it is expected that Mark Hoban MP, financial secretary to the Treasury, will be in attendance.

Ahead of this debate AIFA has been invited to supply MPs with comprehensive written and oral briefings of our core messages, and key concerns around regulation and the RDR.

Both of these events are illustrations of how AIFA conveys our membership's key issues and concerns in Parliament and amongst other key policymakers on a range of areas.

AIFA strive to ensure our members are represented at all level of domestic and European policymaking.

Katie Taylor
Political Analyst

The Association of Independent Financial Advisers (AIFA), supported by Standard Life, today launched good practice notes at a seminar in the city to help members take a more informed approach to adopting platforms and wraps.

The report provides step-by-step guidance on making the crucial strategic decision about whether to use a platform and how to choose the right providers for their clients and their business.

Drawn together by an experienced steering group of practitioners, the Platform Due Diligence notes provide firms with valuable guidance as they consider the use of wraps and platforms within their businesses.

The guide, which has been seen by FSA, will help provide IFA firms with a ‘breakwater' to guard against future regulatory requirements. According to the NMG research almost half (46%) of IFA firms say that the fear of potential future regulation is one of the main current barriers to using a platform.

Chris Cummings, Director General, AIFA, said: "The recent announcements from FSA are a clear wake up call that firms must be able to robustly evidence the rationale for how and why they select platforms.

To help advisers, AIFA has developed good practice notes that will better equip firms to make considered decisions about the adoption of wraps and platforms.

By following the decision making process and rationale set out in the guide, IFA firms will have a robust due diligence process."

Mark Polson, Head of Trading, Standard Life, said: "In our conversations with advisers about platforms we know just what a difficult decision making process it can be.

"The use of platforms in our profession is still relatively new and has attracted regulatory scrutiny.

"The important issue is adopting a platform strategy that is right for clients, and being able to demonstrate that, as a business, business owners took a robust approach in making the decision.

"The guide AIFA has produced will help members do exactly that."

The Steering Group set up to oversee the platform due diligence project comprised the following members:

Chris Davies, Managing Director, 2Plan
David Ferguson, Chief Executive, Nucleus Financial
Ian Howe, Managing Director, Baigrie Davies
Martyn Laverick, Marketing Director, AWD
Ian McIver, Managing Director, Whitechurch
Dawn Mealing, Bluefin Group
Duncan Muir, Development Manager, Standard Life
Mark Polson, Head of Trading, Standard Life

The publications is available to members here: Platforms and your business.

Since FSA published its latest 3 part work on the Retail Distribution Review, we have been analysing the papers and examining the detail. 

It is important to note that, even now, there is still a great deal of work to be done – and FSA’s thinking is far from clear in many areas. 

Over the coming weeks, we will be producing a series of briefings for members that look at each part of the RDR in depth. 

These will help members better understand the issues, resolve some of the ambiguity that FSA’s rules have created, and, ultimately, allow members to better plan for the changes they need to make.

It must be said that there are a number of areas where we feel FSA has failed to deliver on the objectives originally set for the RDR.

And, looking at the proposed costs of the exercise, we are deeply uncomfortable about the proposed benefits that will be delivered. 

Our intention is to challenge those areas where we believe a better outcome can be realised, hold FSA to account in areas where progress can be made (so that the costs are better focused and thus, can be reduced), and make sure we help members trade through these changing times.

Read the full article

At this time of economic uncertainty and when consumers are in need of more financial advice, it is imperative that good, experienced advisers should not be driven out of the profession as a result of the new Retail Distribution Review (RDR) qualification requirements.

Responding to demand from members to help them meet the RDR December 2012 deadline, AIFA is working with the Chartered Institute of Bankers in Scotland (CIOBS) and BPP Learning Media to offer a new Diploma that gives a case-study route as an alternative to the traditional examination routes currently on offer.

The new Diploma will help existing advisers apply and demonstrate the knowledge and planning skills gained in achieving their existing advice qualifications and via their experience as IFAs.

The Diploma will consist of one written examination covering a series of scenario-based case studies designed to assess the adviser's ability to develop and present suitable recommendations to clients.

The new Diploma in Investment Planning will be submitted to the Financial Services Skills Council (FSSC) for approval.

Those advisers choosing this route will gain a qualification exceeding the minimum level 4 requirements stipulated within the RDR, and will not be required to undertake gap-filling CPD.

The new award is anticipated to be at SCQF level 9, equivalent to QCF level 5, future-proofing any additional qualification requirements that may emerge up to that level.

The new Diploma will be formally launched when FSSC publishes its list of Approved Examinations, with registrations accepted from that date. The first assessments will be available from 1 August 2010.

The Diploma and support package will be available to AIFA members for £655. The cost to non-AIFA members will be £695.

Assessments will be available in more than 40 centres throughout the UK, on demand, using an innovative online assessment system developed by CIOBS.

For more detailed information please refer to the online FAQs regarding the Diploma.

Those considering the qualification are encouraged to register their interest online now at www.aifa.net/qualifications.

FSA is due to publish its RDR Feedback Statement at the end of this week.

Although we don’t know exactly what the paper will hold, we can all be sure that the requirement for better qualified advisers will remain. 

In simple terms holding a current benchmark qualification (FPC, CeFA etc) will not be sufficient for IFAs to meet FSA’s drive for greater professionalism in the sector post 31 December 2012.    

The Financial Services Skills Council (FSSC) has set the new standards for qualifications in the post RDR world; new qualifications will be available later this year once the professional bodies offerings have been approved. 

The new standard for IFAs will be set at National Qualification Framework (NQF) and Qualifications and Credit Framework (QCF) level 4.  This will extend the content of the current level 4 qualifications.

In the meantime under FSA’s “no regrets” policy, those holding one of the currently available level 4 qualifications will be able to fill the knowledge gap between the existing and the new qualifications with CPD.  

We are unable to confirm exactly what this will entail but you should be aware that the backfill CPD must be completed by the end of 2012 to meet the RDR implementation date. 

Read the full article

Further to the recent publication of AIFA’s RDR Manifesto, we have now submitted our response to the RDR consultation on behalf of members and the following is a summary of the response. 

Members own comments and observations were integral to the formulation of its overall stance so many thanks to members who took the time to pass on their views and concerns.

Our response

AIFA does not dispute that there is room for improvement in the distribution of retail investment products in the UK. 

However, in the three years since the RDR was announced, the UK has suffered unprecedented economic turmoil. 

This has made delivering the requirements of the RDR more difficult than if circumstances had remained benign. 

n the response, we therefore sought to re-establish the contexts within which firms are trying to complete this work.

Read the full article

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