One recent Saturday morning, I picked up the Financial Times. This is not something I like doing on the weekend - not when I'm out of the office and The Sun's News In Briefs is on offer.
It contained a letters from Tracey Mullins - Director of Public Affairs at the Association of Independent Financial Advisers. She was complaining about a comment from the CEO of the British Bankers' Association, Angela Knight. Knight had said the FSA's proposal to introduce a multi-million pound general funding pool – to be used for catastrophic losses when any company fails - which would "only cement the IFAs' inappropriate conduct of their business".
I’m not surprised IFAs felt aggrieved at that little pot-shot. Anyone reading statements like that might be forgiven for thinking the BBA had its act together. Far from it. The BBA may think they have their house in order but - to use another property-related metaphor – in truth they’re living in a glass house. And everyone knows people who live in glass houses shouldn’t throw stones.
The retail banks have a horrendous record when it comes to misconduct. Every year they have to pay out massive amounts of compensation for "inappropriate conduct". According to the Financial Ombudsman Service, a significantly higher number of complaints of misconduct were made against banks in 2006 (26% of the total for all providers) than the IFA sector (14%). Not only that, but almost twice as many complaints were upheld against banks. In contrast, fewer complaints are upheld against IFAs than any other sector.
The Financial Services Compensation Scheme will provide a regulatory safety net and help maintain confidence in the financial services industry. It is in no-one's interest to continue with an unsustainable system that places a disproportionate burden on certain sectors of the industry while allowing others to avoid their fair share of the costs.
But Angela Knight’s comments are symptomatic of a wider problem. This is yet another example of the retail banks picking on IFAs. Why wouldn’t they? After Natwest’s disastrous branch closure programme, the retail banks have shown themselves determined to keep a presence on the high-street. While mortgage lenders like edeus work in partnership with IFAs, the retail banks are doggedly side-stepping third parties. They are determined to sell direct to consumers via their vast branch networks.
As for Angela Knight - she should take a good look at her own industry before knocking IFAs. And then, hopefully, I can get back to News in Briefs on my Saturday mornings.
Alan Cleary is managing director of edeus.
The views expressed are those of the author and not those of the company he represents.IFAonline
'Truly making a difference'
Avoidance, evasion and non-compliance
From 6 April 2019
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