Trade bodies are too nice, says Treasury Select Committee
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The Treasury Select Committee has accused Robert Sinclair, director of the Association of Independent Financial Advisers, and other trade bodies of being too nice when giving evidence on financial regulation.
AIFA was giving evidence alongside the Institute of Financial Planning and the Association of Private Client Investment Managers and Stockbrokers this morning.
Their evidence was heavily focussed on the Retail Distribution Review and how it will impact advisers and consumers.
But the chair of the committee questioned whether the trade bodies were holding back their true feelings about forthcoming regulation and questioned whether the “long shadow of the FSA” may be stopping them from expressing their true opinions.
The committee urged the trade bodies to submit evidence in private if they were worried about the regulator.
Speaking about the RDR, a member of the committee told the trade bodies: “This whole discussion brings out my worst fear, that trade bodies never really say what they think. They take what’s a given and fiddle with it at the edges.
“Trade bodies are always terribly nice. They don’t turn around and say this will not work and take the appropriate steps too get the media on their side to make change happen.”
She questioned whether the trade bodies were seizing their opportunity to tell the committee what changes needed to be made.
She asked: “This is your chance, are you actually taking it?”
Sinclair says: “The challenge we face is that within the IFA community we have three camps. One endorses the changes, one believes changes need to happen but will get on with it anyway and another group is saying it will not put up with any changes.”
He says these proportions could be 30%, 40% and 30% and AIFA has to balance the views of its members.
The trade bodies were not asked specifically about the mortgage market, but Sinclair did say he is confident that senior figures within the Bank of England have a good understanding of how the lending markets work, as opposed to their understanding of the investment markets.
He also expressed concern about the potential conflict between the Monetary Policy Committee and the role of the proposed Consumer Protection and Markets Authority, with both having different priorities.
Martin Lewis from MoneySavingExpert.com was also giving evidence and warned that the mortgage market is a ticking time bomb if interest rates increase.
He says: “We have a ticking time bomb in the mortgage market at present. Some borrowers are on 4% over the base rate. If the base rate goes up to 5% borrowers are going to be paying 10%.”
Lewis also says he is receiving a large number of emails from people who are suicidal because they are in such dire financial straits.
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Readers' comments (6)
Anonymous | 19 Oct 2010 1:24 pm
...."within the IFA community we have three camps. One endorses the changes, one believes changes need to happen but will get on with it anyway and another group is saying it will not put up with any changes"
Perhaps it's time to have three trade bodies who can properly represent the views of each camp.
Why, are our trade bodies being nice? After being kicked, punched and abused by our regulator, isn't it time we articulated our views and help secure our futures?
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John Reid | 19 Oct 2010 1:33 pm
Typical, trade bodies.... lets not upset the FSA. Our only chance to get our voice heard and yet again it doesnt happen. Why does the Treasury Select not ask for comments from IFA's and Mortgage Brokers... the ones who are in the industry and have watched it being destroyed by Banks in the last couple of years and who realise that the RDR and MMR will be the nail in the coffin for many of us. And no doubt the cowboys who are stil out there will find a way round it while good honest brokers are going to the wall daily.
Also Martin Lewis... 4% above a 5% base rate does not add up to 10% - its 9% and it might seem a tiny point however his point is correct since these people who will in real terms be going up to 9% interest it is probably the end of house ownership for them and there are little to no social housing for them to go to either. What happens to these families? Conservative government has been pushing for homeownership since the late 70's by selling off all their social housing and now its coming back to haunt them.
There are hundreds of thousands of people out there who are on variable rates and cannot get a mortgage either through bad credit or through not enough equity..... Wait until the interst rates start to increase..... we have seen nothing yet. !!
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Mike Fitzgerald | 19 Oct 2010 2:12 pm
Dont blame the Trade bodies for being too nice,They are trying to help the industry and keep the FSA on side.
Its now time for all brokers, even those who are anonymous to write, email their MPs and get the message across that the mortgage industry will be ruined unless urgent action is taken by the Goverment to address the problems faced by over regulation.
Failure to do this will mean that millions of people will not be able to obtain mortgages and buy their homes.This will mean that the recession will go on for longer with all the resulting social problems
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IFA Defence Union | 19 Oct 2010 2:38 pm
If you don't support the vociferous you will never be heard.
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Anonymous | 19 Oct 2010 2:53 pm
Its not trade bodies plural, its just AMI. For god's sake guys say something otherwise what the heck am I paying you for???
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Pat Bunton | 19 Oct 2010 3:57 pm
The trade bodies generally do a very good job in what are often very difficult circumstances and AMI has fought long and hard for its members, on many issues and with great success.
In any negotiation you have to balance the outcome you are looking to achieve against the methodolgy you will adopt and judge what will be most effective.
A confrontational approach can be very satisfying and help relieve pressure, however more often than not it is counter productive and may lead to entrenchment of positions.
Of course there is a time and a place for a harder approach, particularly where one feels that the other party has an 'open door, closed ears' position, but simply chucking hand grenades about in public is not generally sensible.
It is interesting that the Committee raised this issue directly and in so doing have shown that they also understand the difficulties arising from negotiation in the public domain
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