Richard Griffiths’ recent comments on the state of independence in the mortgage market are interesting.
The public is confused on independence which is no great surprise as some prominent organisations that promote independent activities don’t appear to know who can do what.There is a need for a representative body for advisers. There is too much fragmentation and lack of clarity as to who represents who. There is ignorance of the changes in mortgage and general insurance regulation and the types of specialised areas of advice available. Take our own firm for example. We are directly regulated. We are not multi-tied but choose not to conduct investment business. We provide specialised advice on mortgages and protection insurance. We can arrange agencies with anyone we want to or place a mortgage with anyone, and we offer a fee option for our services. Are we classed as an IFA? To find out I went to the IFA Promotion website. Surely it would know. IFAP’s website says there are three ways to get advice – through an IFA, a tied agent or a multi-tie. Of these, only an IFA must offer the option to pay by fee. So we are an IFA, right? So, follow the link to AIFA and check the application form. Yes, we seem to fit the bill there too, same with AMI. Ah, but there’s a problem – our type of firm can become a member of the AIFA and AMI, but not IFAP. Although we fit the criteria to be an independent adviser as as stated by IFAP, we can’t join as we don’t provide investment advice. IFAP has 32 product providers as sponsors. Five of the firms do not even provide investment products. Very odd. These firms are well supported by the mortgage and protection readership of Mortgage Strategy. Members of the public who visit, say, Bright Grey’s website (which doesn’t provide investments) are referred to advisers who only meet IFA Promotion’s criteria, not those that might give them the best advice on their protection needs. Indeed, the same clients may end up being referred to an IFAP member which is a member of a network and operates preferred panels of product providers – i.e. it operates as an IFA in name only. A different business from an independently owned and run DA firm. So what are we then? Left out, I think, along with many other DA firms which can provide specialised services that will greatly benefit the general public. The public is effectively being deceived because it is given the impression its needs can only be met, by say, the criteria of IFAP membership, not the reality of regulation. IFAP is the premier independent advice promoter and has a responsibility to point out all the options to the public.