23rd March 2011
Alarm goes off in the “Kipper” Smokehouse.
Following on from Tuesday's "IFAs done up like a Kipper" bulletin, Stephen Gay at AIFA has made contact and asked that we make members aware of his view of the situation leading to the resignation of Doug Johnstone. We are of course very happy to do so.
Stephen Gay has also kindly agreed to an exclusive "written interview" with Panacea and to assist with this, we would ask members to submit to us any questions they would like to ask of Mr. Gay, the ten most popular will form the basis of that interview. Please send these to james@panaceaadviser.com soonest.
Responding to the article suggesting that IFAs have been “done up like a kipper” he says:
“AIFA seeks to represent the interests of members of widely differing views. It does so through a democratic process of electing Council members from constituencies that are designed to represent firms of all sizes. Council decides AIFA policy and agrees key documents such as our RDR submission to the Treasury Select Committee. We also have Working Groups on key subjects, such as the RDR, so that we can consult a wider range of firms who wish to participate in the formation of policy.
The RDR Working Group was involved in our response to the Treasury Select Committee and helped develop the submission. Despite having his views heard, and influencing many aspects of the submission, Mr. Johnstone was unable to secure support for some of his opinions from the majority of participants. He then used an unpublished document, which had been shared in confidence, to undermine our work with the Chair of the Committee, Andrew Tyrie MP.
In February AIFA’s Council discussed Mr. Johnstone’s conduct and concluded unanimously that it breached acceptable standards. He was invited to provide assurance that his conduct would not be repeated. Mr. Johnstone has declined to provide that assurance and we have accepted the resignation of Creative Benefit Solutions, of which he is Chairman, from the Association.
It is entirely natural that there should be differing views on difficult market reform issues. It is easy to present a united front when issues are non-contentious, but it is the way we conduct ourselves when we are in disagreement that will to a large extent determine the level of respect our community receives from the policy-makers we seek to influence.”
The coverage this issue has attracted has been both surprising and encouraging as the RDR debate does have the ability to create a lot of passion on all sides and shine a light on misunderstandings, failures and processes- right or wrong.
At Panacea, we believe that there is a serious need for greater openness from AIFA and indeed the FSA, no matter how uncomfortable that may be.
In the interest of fairness, we asked Doug Johnstone if he had anything to add in light of the AIFA response.
Doug says, “I do not believe AIFA’s policy of supporting the phasing out commission had the support of its wider membership. The overwhelming majority of new business is still commission based and I believe that the majority of IFAs do not welcome a move to a fees-based remuneration with all the associated expense to the industry. If IFAs prefer the fee route they could select that today but the majority choose not to do so. Before they made their submission to the government consultation I asked AIFA to remove all reference to support for RDR by their membership but they declined to do so.
This is not an issue of the commission versus fees debate where I recognise there are widely differing opinions. It is matter of whether AIFA is representing the views of its wider membership.
After AIFA published its submission to the Treasury Select Committee I informed AIFA’s Director General Stephen Gay that I was going to write to the Chairman, Andrew Tyrie, about my concerns and he raised no objection.
I believe that the minutes of AIFA Council meetings should be available to all members so they are aware of the issues that are discussed, including submissions to government consultations. We live in an open society and AIFA members should have confidence that their trade association is fully transparent.”
A trade organisation should do what it says on the can and I would hope that the passion contained within many of comments our bulletin created will lead to greater and more constructive dialogue between AIFA and it’s members. They do a lot of good work and I think that the perception of their failures is heightened by their inability or reluctance to successfully communicate the good they have done.
Finally, here is a selection of comments on the subject from our Forum and the various trade papers, click on the trade links for their full story and reader comments, they make interesting reading-
“I resigned from AIFA sometime ago too as I did not believe them to be a democratic organisation representing the wishes of it's members. This is based on personal experience of being appointed to AIFA's Longstop working group whilst Chris Cummings was still in post. Only one meeting EVER took place on the subject and the meeting was arranged for a date I was on holiday! Since that meeting, there has been no other meeting or discussion on the subject that I am aware of and there was no documented follow up that I am aware of including the issues agreed at the meeting (I could not attend)”.
“The only thing that Doug’s views have done is to ruffle a few committee feathers, whilst those same members seem oblivious to the financial destruction of many IFAs. I do not believe the 24 members on the RDR working party represent AIFA members or the 20 - 30% of IFAs directly impacted by the lack of grandfathering. AIFA even attempted to undermine those IFA efforts that brought RDR to the floor of the commons and dragged Hector Sants before the TSC. I’m afraid AIFA is seen by many as part of the problem and not the solution”.
“We have done ourselves up like kippers. We argue with ourselves, do not have one trade body to represent us and cannot agree on anything”.
“Advisers who wish to make their concerns heard but do not believe that AIFA represents their views on the RDR should join Adviser Alliance”.
“You would have thought that any organisation that claims to represent the interests of IFA's would be keen to talk to IFA's and help and understand their concerns but as far as I can see AIFA does not really represent the interests of the smaller IFA or indeed show it cares for the smaller IFA at all. It's argument that is it doing so behind the scenes is hard to justify without any information forthcoming to show otherwise. I have for many years never felt they represented the interests of small firms and still don't”.
“AIFA along with the CII/ PFS have all sold us down the river”.
“Me Too
No faith in AIFA at all, useless! I wonder if they care”?
“Someone please enlighten me as an IFA what benefit is there for being a member of AIFA or the PFS, they have done nothing for me regarding opposing the RDR. My firm and I will not be renewing our subscriptions unless I’m missing something”??
“Stand up for What is Right. Harry Katz says, "Chatham House Rules are well known, not unique to AIFA and it is the proper way to proceed in any committee. Johnstone’s action was akin to leaving a turd in a swimming pool. Just not the done thing. It rather highlights his lack of ethics and morals" Maybe he is just sick of all the pussyfooting and pandering to the whims of a mad dictatorship of a regulator and is calling a spade a spade. Wish to God there were more like him. Maybe we would not be in the mess we are now. Unlike AIFA, at least he has some balls”.
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