Challenges facing the industry
Commenting on his first year as AIFA's Chairman, the Rt Hon John Gummer MP, identified some of the "..significant challenges" that the industry is facing. He said,
"First, I am profoundly concerned at the flood of regulation and controls which affect business. I am especially alarmed at their effect on the smaller business whose vital contribution to dynamism and growth in the economy should be nurtured, not throttled. I intend to fight for the cause of proportionate and reasonable regulation during my term of office.
"Second, I am a strong advocate of good quality, thoughtful representation and the bodies which provide it. As a Minister, I was on the receiving end of many representations, the good, the bad and the illiterate. The authorities need effective representational input if they are to take the right decisions. Whilst I chair AIFA, I aim to ensure that we play an effective part in that process.
"Third, I want to make sure that the voice of the intermediary is heard in the EU. ......... The EU can quite unwittingly launch a legislative proposal which makes no sense whatsoever at ground level. My wish is to ensure that we prevent that unwitting damage. No one can doubt my enthusiasm for the concept of the European Union; but that does not blind me to the problems it can cause if its ideas are ill-thought through."
Difficult year for IFAs and AIFA
Acknowledging that it had been a difficult year for intermediaries as business had been "slack", John Gummer commented that AIFA had "...naturally shared the pain of its members". He said,
"Member retention is high but many firms have shed registered individuals and this affected our income. There has been no subscription increase since the inception of AIFA over four years ago. This will have to be addressed this year — but you have my assurance that costs will be kept under tight control.
"This combination of circumstances has meant that AIFA slipped into deficit in 2002/3. The start-up of AMI [the Association of Mortgage Intermediaries] imposed financial strains, although we expect the division to be self-financing from next year. The start-up costs were all incurred in the last financial year and income from subscriptions has only started to flow this year. "
Sandler suite of products
John Gummer then addressed the issue of the Sandler suite of products. He said,
"Whilst we may look forward to a recovery in the levels of business in the coming year, we must also recognise that it should be profitable business. Attempts to fix price controls by Governments rarely work. The stakeholder pensions experience is an excellent case study in that truism. ...no margin for the cost of advice was built into these products.
"Several years on and many thousands of shell schemes later, the role of advice and persuasion has been recognised. But the readiness of those designing the new Sandler suite of products to accommodate this in their proposals for charge structures has yet to be tested."
He continued,
"Let us hope that consumers will not be subjected to another experiment but their need for sensible, focused and appropriate advice from those who know what they are talking about is accepted, in regulation and in the charge structure."
To access a copy of the AIFA Report & Accounts 2002-2003 on-line, please go to:
www.aifa.net/publications/NEW AIFA Accounts 2003.pdf
To obtain a copy of the publication, please contact AIFA on: 020 7628 1287.
