In his final speech as chairman of the Association of Independent Financial Advisers at the Association's annual dinner yesterday, Lord Hunt said that the predominant themes during his three years as chairman were regulation and reviews.
In a personal plea to guest speaker FSA chairman Sir Howard Davies, Lord Hunt says: “I urge the FSA to deploy rigorous self-denial on new initiatives. Sir Howard, you have been lumbered with a complex and lengthy process whenever you want to change anything. As the number of new initiatives mounts, so the process backlog grows. And delay in the North Colonnade means delay for businesses.”
He added: “Businesses, especially small businesses, cannot keep up with a flood of papers, any one of which may contain a torpedo for their plans. In addition, the FSA cannot function if it becomes tied up in its own processes.”
Referring to possible changes in the market following the FSA's consultation on the reform of polarisation, Lord Hunt said: “Next year, IFA firms are likely to need to consider their positioning in a market where there are more options. They will have to assess whether the distributor company fits with their corporate strategy; the competitive impact of new disclosure arrangements for tied agents as well as IFAs; and the potential effect of a Sandler suite of products.
“At least the menu approach [which AIFA has developed with IFA Promotion] allows them to think first of their business strategy, and their choices are not cut off by what the regulator demands. They need to have some confidence that the goalposts are not suddenly going to shift again; or at least not by too much and not repeatedly.”
He then considered how the situation could be remedied. He said: “First, there could be a self-denying ordinance, as I mentioned. Second, perhaps the FSA should look to work more in partnership with the industry and support its initiatives, rather than invent everything itself. Third, the sector needs room to create its own ideas. The problem with the stream of third party initiatives is that it makes the industry passive and reactive. A greater sense of partnership might allow more creativity and a greater sense of shared responsibility.
“For our part, AIFA certainly would respond positively and indeed it is my hope that we will be able to get back onto the front foot in 2003, after 12 months where our agenda has been dominated by others, not least CP121 and Ron Sandler.
Looking back to the start of AIFA and the objectives which were set at the time, Lord Hunt asked: “Have we achieved what we set out to achieve? We wanted a single voice for the IFA sector, from the largest national to the smallest one-man band. And AIFA does indeed embrace every variety of IFA, with around three quarters of the market in membership.
“We wanted to be taken seriously as a trade body and as the representative voice of the IFA by the FSA, government and anyone else with influence over the lives of IFAs. I am happy to stand by our record. We have changed agendas, not just responded to them, not least over CP121 and the introduction of the menu option. And there have been many other more subtle 'hits'.
“Of course, there have also been misses. There are still initiatives which almost casually try to bypass the role of advice – despite all the evidence that the advice gap drives the savings gap. But, overall, there has been progress and I am delighted to have been associated with it.”