A member of the AIFA RDR Working Group has launched a public attack on the organisation saying it is disproportionately influenced by pro-fee IFA firms and takes a "Stalinist approach" to crushing dissent.
Doug Johnstone, chairman of Creative Benefit Solutions, says he has lost all confidence in AIFA’s ability to reflect the views of its wider membership and has resigned his firm from the organisation.
He says AIFA “largely ignored” the views of a members' Working Group set up to craft AIFA’s submission to the Treasury Select Committee (TSC), after MPs asked for evidence from the industry to scrutinise the rule change.
Johnstone says AIFA makes it clear “dissent is not warmly welcomed” and says the Working Group operates the “Chatham House” rules, in which members are not allowed to talk publically about what has been discussed in meetings.
In January, he wrote to TSC chairman Andrew Tyrie telling him AIFA’s submission to MPs prior to the hearing on the RDR did not reflect the views of a “substantial majority” of the membership of AIFA on the issue of replacing commission with adviser charging.
Johnstone says Stephen Gay, director general of AIFA, then wrote to him accusing him of behaving “dishonourably” and having gone “behind his back” to Tyrie.
In his reply, Johnstone tells Gay: “I do not accept that to publicly disagree with AIFA’s position brings the association into disrespect. I requested evidence from AIFA to support their view that RDR and especially the commission ban has their members' support."
Johnstone says AIFA should have canvassed the view of its membership to ensure a majority view prevailed in their TSC submission.
But he says despite assurances, they have refused to provide him with any evidence of this.
In paragraph 13 of their TSC submission AIFA quote from the “independent” research by the NMG Group of July 2009.
Johnstone alleges the research AIFA quotes in its TSC submission was commissioned by the FSA, and that its results are "open to interpretation".
The NMG data showed only 30% of advisers were enthusiastic advocates and the balance less supportive by varying degrees.
"I believe this can be interpreted that 70% of advisers are opposed to the RDR,” he says.
Johnstone says his company is opposed to the RDR but would have responded to the survey as “willing adaptors with no alternative”.
“We have a business to run and must do so based on the prevailing legislative and regulatory environment,” he added.
In a statement AIFA says: “The RDR Working Group was involved in our response to the TSC 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.
"It is entirely natural there should be differing views on market reform issues."
Havensrock Thrive App
Don’t ‘leave it all on the pitch’
21 firms in total
PA360 2019 conference
Latest news and analysis