10th November 2011

Stephen Gay's November Blog

I have been asked to speak later this month on the progress of the Retail Distribution Review, and have been asked to address the question of whether it is too late to ‘avoid the RDR meteor’. A short speech, you might think, but there are lessons in the metaphor. Scientists have speculated that an apocalyptic meteor impact could be avoided if it were given a small nudge far enough in advance.

And that is the case with regulatory change too. If we want to influence outcomes for our members, it is all about timing.  Getting to an issue far enough in advance, with a constructive perspective is much more likely to be productive than to argue against the prevailing agenda when the decision has already been taken.

The policy agenda over the last month has been dominated by the pre-legislative scrutiny process of the Financial Services and Markets Bill which will soon be making its way through Parliament. Many in our community will not have had this on their radar screens, but many issues that concern IFAs today in the performance and behaviour of the regulator have their roots in the Financial Services and Markets Act, and the issues we face in the future will be affected to a great degree on how the new regulatory framework operates, and that depends on the way the Financial Services Bill is enacted. So it is really important.

AIFA responded to the call for evidence on the Bill, and appeared before the Joint Committee in Parliament on October 20^th.  There were two key issues that we were able to press during the hearing; the first was the impact of the layering of regulatory costs on small advisory businesses, and the second was the need for a fifteen year longstop.  It is worth noting that whilst the arguments on these issues are many and various, it is crucial in the public arena to put forward the case on the basis of its benefit for consumers if we are to have a chance of influencing policymakers.

Having the opportunity to make this case doesn’t come cheaply or easily though.  It requires many days of preparation  - analysing the draft Bill, developing positions that will stand up to scrutiny, preparing for the breadth of subject matter than can arise in committee hearings, and developing a congruent media position. These are the things that have to be done if we are to be taken seriously, and they are funded by our member contributions.

Some may ask of the longstop issue ‘Why haven’t they shouted about it before?’  Well, the answer to that is that whilst we have consistently been making the case, there is a time and a place to push in public if we want to optimise the chance of success.  The political process, and the new Bill has brought us an opportunity that wasn’t there before, and the ground had been laid so that we could press the case when the right chance arose.  Apart from AIFA, there are of course others in the community who have put a great deal of time, effort and experience into this issue, and that is to be respected and applauded;  there should be no competition here – wherever elements of our community can find common cause it is for the general good.

In all policy matters AIFA continually seeks to develop the right policies, and to deploy each with the right approach - but whether we are talking about the strategic sweep of policy development, or specific issues of regulation, getting the timing right is the crucial judgment to be made.

RDR