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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."
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No faith in AIFA at all, useless! I wonder if they care ?
Posted by: DH
Someone please enlighten me
As an IFA what benefit is there for being a member of AIFA or the PFS, they have done nothing for me regarding opposing the RDR. My firm and i will not be renewing our subscriptions unless i'm missing something??
Posted by: Trevor
Peter
None whatsoever Oh sorry the only benefit of the PFS is the "discount" you get on CII exam material that we are forced to get !!!
Posted by: DH
This is not a completely accurate account.
Firstly it should be borne in mind that Doug Johnstone’s main gripe and one that involved copious exchanges of e-mails, revolved round his insistent belief that the only way to charge for Group Pensions was via commission. Bearing in mind that in these circumstances it is the firm who is the client, one could with some justification argue that this stance is not only untenable, it is also unethical and patently nonsense. As far as AIFA is concerned there are about 24 members of the RDR working party and there are around 16 members of the Council. Doug Johnstone was in a minority of one. Having dealt with this person I can only say – speaking in my own capacity – that he is exactly the sort that brings financial advice into disrepute. He built his business on a high commission model and although he may have had 45 years experience in the industry it doesn’t automatically make him a worthy or a good example. Trying to debate with him makes banging your head on the wall a worthwhile experience. I can’t really identify anyone who is completely happy with the RDR. There are facets which some are willing to adopt and others that cause great dissatisfaction. But they are not the same issues for everyone. Therefore for Johnstone to state that “this can be interpreted that 70% of advisers are opposed to the RDR,” is a misrepresentation. In one form or another I would hazard that 100% of Advisers are against the RDR, it’s just that some of us – who are actually still active and not semi retired or non executive – face the reality of the situation and understand that at present we have a completely unaccountable regulator who is able to run their agenda unimpeded by any outside agency. It isn’t a matter of dissent being unwelcome – I can assure you it is certainly not the case, but there are certain rules to be observed. Chatham House Rules are well known, not unique to AIFA and it is the proper way to proceed in any committee. Johnstone’s action was akin to leaving a turd in a swimming pool. Just not the done thing. It rather highlights his lack of ethics and morals. He really is a prime example of that disparaged term dinosaur. I rather suspect he’s past it. Bear in mind that most of his comments and submissions have been in a personal capacity rather than as a direct representative of his firm. I also suspect that the firm he founded is a very different animal today. Firstly they have a qualified accountant as MD and most of the board seem to be well qualified and thoroughly professional advisers. It wouldn’t surprise me at all if they were acutely embarrassed by Johnstone’s antics. Again speaking for myself – he has done AIFA a real favour by leaving.
Posted by: Harry Katz
PFS
They do have structured CPD<meetings and apparently the Gap Fill meetings are good and 'Allowable'. The magazine though is dire,not like it used to be.
Posted by: Phil wilson
Unfair I say !
I must say I took offense to the comments of Harry Katz (if that is indeed your real name!). Judgemental attitudes, I have little time for I am afraid. So what if Mr Johnstone was the unfortunate subject of a bathing related incident? I myself have left a turd in a swimming pool on more than one occassion (sorry Malcolm).. I am not proud of this but it can happen to any of us, something Mr Katz would do well to remember!
Posted by: stuart bratt
Stand up for What is Right
Harry Katz says "Chatham House Rules are well known, not unique to AIFA and it is the proper way to proceed in any committee. Johnstone’s action was akin to leaving a turd in a swimming pool. Just not the done thing. It rather highlights his lack of ethics and morals" Maybe he is just sick of all the pussyfooting and pandering to the whims of a mad dictatorship of a regulator and is calling a spade a spade. Wish to God there were more like him. Maybe we would not be in the mess we are now. Unlike aifa, at least he has some balls.
Posted by: anonymous
On going renewal commission for diddly squat - wrong!
I know this blog is about AIFA but why is there a constant barrage of negative comments abour networks and treatment of renewal commission. Everyone gets it wrong. If you are a one man band and FSA directly authorised and you retire - you are removed from the FSA register and guess what - your commission stops and the provider wins. If you are a one man band in a network and you retire - guess what - the same happens - it's hardly rocket science. The issue is that whilst everyone is now getting ready for RDR (which broadly means having a renewal stream shaped business rather than relying on new business (and I actually agree this is a solid basis on which to trade) the downside is that payments of those renewal commissions from providers all stems from one thing - being on the FSA register. So basically if you're a one man band you have a problem come retirement. So, networks won't receive 100% for diddly squat - far from it. There are only 2 solutions - you either sell for a capital value or you find a method of receiving an on-going % of your renewal commission at retirement which is only possible if the new adviser (a trusted adviser) is still showing on the FSA register. If anyone reading this wants to discuss the 2nd option then please contact me. Ian McIver MD The Whitechurch Network
Posted by: Ian McIver
Oh Dear
We don't need the FSA to destroy our profession, we are very capable of doing it between ourselves. In fighting between each other really is pointless.
Posted by: Swanny
Infighting?
The reality is that infighting is and always will be part and parcel of life - not just IFA life. Let's not skate away from the central issue which is that Doug, and many, many others, feel that AIFA is not representing their views and that they are greasing the rails for the RDR train. Adviser Alliance was formed specifically because no IFA representing body was opposing the catastrophic RDR proposals in any meaningful way. So, anybody who wishes to fight the RDR and join a body that is run by IFAs, as opposed to administrators, join with us at www.adviseralliance.co.uk
Posted by: Alan Lakey
Is there any hope left
Re Alan Lakey,s post After the tsc rdr hearing, Is there any real point in continuing the fight against rdr? Or should we simply acknowledge that we are ruled by a quasi judicial quango that can do to us as it sees fit because it is accountable to no one not even parliament
Posted by: rdrduptohere
???
It was not my intention to have a go at Alan,whom I have every respect for. I was just asking if, in spite of his best efforts,we have no choice but to obey those who must be obeyed.
Posted by: rdrduptohere
AIFA Council
Harry Katz of a member of the AIFA Council. Need I say more about the quality of the industries representation
Posted by: doug Johnstone
Would you know quality even if it trod on you?
Doug Johnstone. A throwback from the past without even the basics of a decent education. No syntax, poor grammar and the inability to use a spell checker. Playing to the gallery may get you fans, but it certainly doesn’t put you on a pedestal. Anyway one wonders why you bother at all – you are a non exec – presumably no longer involved in the day to day business of giving advice. You are not alone in being able to denigrate those with whom you disagree. In all my 25 years in this business I have never, ever come across anyone who even gets close to your appallingly low standards.
Posted by: Harry Katz
Warning
Let all of the above be a warning to any well-meaning people who are minded to give up their own time to serve on an Aifa Working Party. Disagree with the party line and be prepared to be lambasted. That their Directors see fit to spew personal, lavatorial bile via online media says all you need to know about Aifa. They would do well to remember that on yesterday's news the first successful Twitter-related libel action was reported. As for their so-called 'Leadership' - Cummings? Gay? do me a favour. If members are angry with them, it is because they have failed time and again to represent their interests. Even more outrageous is that they seem happy to act against members interests. Mr Johnstone's comments and actions are entirely legitimate and perfectly understandable. More power to your elbow Doug.
Posted by: Colin Featherstone
Professionalism please
I don't think the reputation of the industry is benefitting from these increasingly personal, nasty and petty minded attacks between two individuals. The issues are important and so is the debate. Let's not dilute it by playground behaviour.
Posted by: Alison
Abuse
Alison, I think you'll find the tirade of abuse is rather one-sided. By the way, if evidence were needed that Aifa's clearly, manifestly and totaly lost the plot then surely (as Colin F has said in his post) using online media to abuse their own members is it.
Posted by: John Warham
Interesting debate
Good to hear both sides of the argument.. I can sympathise with Doug Johnstone and yet, what Harry Katz says makes perfect sense too. There's only one way to decide... FIGHT !
Posted by: Stuart Bratt
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Neither condemn or condone Mr Johnstone
as I know him not, nor his mettle. All I know are my own facts as they pertain to AIFA. I resigned from AIFA sometime ago too as I did not believe them to be a democratic organisation representing the wishes of it's members. This is based on personal experience of being appointed to AIFA's Longstop working group whilst Chris Cummings was still in post. Only one meeting EVER took place on the subject and the meeting was arranged for a date I was on holiday! Since that meeting, there has been no other meeting or discussion on the subject that I am aware of and there was no documented follow up that I am aware of including the issues agreed at the meeting (I could not attend). Could it be as Simon Mansell implies that Networks would welcome many IFAs leaving the industry unable to sell their client banks so that by default, the network instead of getting 15-20% of renewals and new business, they'd get 100% of renewals for doing diddly squat? The silence is deafening.....
Posted by: Phil Castle