26th August 2009

Comfortably numb???

In this open letter exchange with George Osborne’s office from IFA- Lyn Cooke one could be forgiven in thinking that the Conservative Party just do not understand IFA business models and how they serve the public. It seems that someone has been anaesthetising their awareness sensors. Lyn’s letter, read the mail trail below it is an excellent example of standard replies being given to issues they appear not to understand or maybe do not even want to understand.  

Sent: 11 June 2009 19:08

To: George Osborne, cc CLIFTON, Emily

Mr Osborne, I am an Independent Financial Adviser and the IFA community is responsible for less than 0.9% of FOS upheld complaints in return for 80% of distribution (the banks have 26% distribution for 59% FOS complaints).

However the FSA Retail Distribution Review plans will lead to the widespread destruction of the independent sector to the advantage of the banks and direct sales companies.

I understand that you claim to be an advocate of independent advice? Could you therefore advise me what you propose to do to support IFA small businesses at this time, BEFORE we are seriously reduced in number to the detriment of the 'man & woman in the street'?

I do hope that you will urge your cabinet colleagues, after the election, to fulfil your promise to (a) simplify the UK tax system, including the whole investment sector, and (b) undo the RDR and put the financial services back to the world where the whole theory of independent advice is again paramount.

-----Original Message-----
From: CLIFTON, Emily [mailto:CLIFTONE@parliament.uk]
Sent: 18 August 2009 13:31
To: lyn@lyncookeassociates.com
Subject: RE: Message from georgeosborne.co.uk

Dear Ms Cooke,

Thank you very much for your message to George Osborne, to which I have been asked to reply.  I do hope that you will accept my apologies for the delay in doing so.

The FSA has failed to perform both its function as custodian of financial markets and in its duty to safeguard the interests of consumers.  That is why we think it should be scrapped, with responsibility for regulating IFA's and other intermediaries passing to a new body called the Consumer Protection Agency.

The RDR is a matter for the FSA and as a consumer focussed initiative, it will pass to the Consumer Protection Authority as the body which will take over the regulation of the IFA community.  So the change in the regulatory structure should not affect neither the progress of the RDR or the timetable.

Conservatives are committed to rebuilding a savings culture in Britain. To encourage people to save, people must have confidence in what they are buying and trust in the financial services industry. 

Restoring trust and confidence is the prism through which the Retail Distribution Review must be seen.  According to recent research on the attitudes of customers, IFAs are one of the most trusted groups in the financial services sector.  We believe that because IFAs are not tied to banks and insurers, their advice is seen to be independent and trusted.  The RDR must not compromise this status by confusing advice that is truly independent with advice that is part of a sales process.

No one can take trust for granted however, and IFAs cannot be complacent and have a stake in ensuring that reforms flowing from the RDR strengthen their reputation.

At a time when there is a great need to move from a culture of spending and debt to one of saving and investment; the RDR can play a vital role in improving consumer confidence and trust in the financial services sector. If the FSA and the industry get this right, it will encourage people to save and save more.

It is good of you to have taken the time and trouble to get in touch with your thoughts.

Yours sincerely,

Emily Clifton
Office of the Shadow Chancellor
House of Commons
London
SW1A 0AA

-----Original Message-----

Emily,

Thank you for your reply.

However, I am concerned that Mr Osborne, and yourself I guess, are following the same trend of carrying on with the same actions of the FSA but just renaming the regulator. I would be more reassured that action was going to be taken if your response had mentioned that working, small IFA businesses were going to be:

a. consulted on a regular basis
b. consulted widely across the country
c. were a majority on the FSA committee considering the RDR changes.
g. taken into account when all new propositions are considered

Also, I would be more reassured if:

a. The Conservative Party had the integrity to stop the RDR and other extensive actions that are being instigated by the FSA.

b. The Conservative Party took into account the natural inclination of all 'bodies' to grow their empires and find more reasons for themselves to exist.

c. The Conservative Party questioned and challenged some of the spending by the FSA, the latest being the commissioning of an 'independent market research company to carry out research on the TCF Assessment Programme, independent market research company to carry out research on the TCF Assessment Programme'.

d. The Conservative Party actually tried to speak to those of us that have overcome the usual apathy to try and save the services of IFA's for ordinary people.

The current IFA community that is considered are those of the large networks, and the Banks who purport to have independent divisions. These are not the people who look after the ordinary public. The small IFA's are the ones who give the ordinary person the care and advice they require and do not charge fees to those who are not in a position to pay. We rely on word of mouth recommendation and the trust that you mentioned in your reply to make a living.

I would like to think that the Conservative Party who say they believe in:

• reducing the interference of the state
• helping small businesses
• reducing red tape
• increasing saving
• reducing the cost of legislation to the state and to the small businesses.

I do hope that this e-mail is considered enough for you to pass to Mr Osborne and for him to take this seriously.

Kind regards,

Lyn
Lyn Cooke Associates Ltd.

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