AIFA changes: What the original manifesto says

AIFA has announced it is to begin accepting ‘restricted' advisers as members to reflect the changing face of financial advice.

IFAonline has taken another look at the original 1999 AIFA constitution to see how the announcement fits with the body's original aims and objectives.

That document, put together ahead of the establishment of the FSA, the review of polarisation and the introduction of stakeholder pensions, outlines a clear need for a trade association representing independent advisers only.

However, it states AIFA must "constantly examine" its own position in the market and be prepared to adapt "if necessary"...

Key paragraphs from the 1999 manifesto...

The AIFA ‘mission statement': 'The AIFA provides a service to independent financial advisers by helping to establish a favourable operating environment, by providing a forum for discussion on non-competitive issues, by providing information to assist them in their business, and by promoting the concept of independent financial advice.'

IFAs need an association which is dedicated to their needs rather than being part of an organisation with wider interests.

It is considered vital that IFAs have a trade association for IFAs rather than be part of a wider grouping such as an association for all intermediaries or part of an association with product providers.

It is generally accepted within the IFA community that there is a need for more effective representational arrangements for independent financial advisers. This is notwithstanding the fact that there is already an Independent Financial Advisers Association with membership open to all IFAs, a Large Networks Association and a Large Intermediaries Group.

The Association recognises that the environment within which IFAs operate is likely to change significantly over the next few years. The Association will need constantly to examine its own position in the market which it operates and be prepared to adapt as necessary. It is for this reason that the constitution is very flexible.

Perhaps one of the major policy challenges for the IFA sector over the next few years is the future of the concept of the IFA. Commission-based advice is being challenged. It is a challenge that is capable of being met but it will require some strong, well-evidenced arguments.

IFAs have to recognise that they are no longer trading in a favourable climate. They are not viewed by the government in a favourable light, largely because of the way that they have handled the pensions review.

Taking a worst case scenario, IFAs, as they are currently known, may cease to exist if the rules in respect of polarisation are changed. This could mean a polarisation of existing IFAs, between those which remain genuinely independent and those which choose to work in a semi-independent status, dealing with a limited number of life offices if that is what the arrangements will allow.

The AIFA should not be in the position of having to disband if such an event occurs. Rather, it needs constantly to examine its own position in the market in which it operates and be prepared to adapt as necessary.

It would be foolish at this stage to say what that adaptation might be. Rather, it is essential that the Association is continually mindful of the need to change. To this end, the Constitution is very flexible, giving substantial authority to the governing Council, and the Constitution can, if necessary, be changed relatively easily through calling a special general meeting or at the annual general meeting.

FROM THE DRAFT CONSTITUTION

The AIFA shall have the following objectives:

• a) To be a central representative body to put the views of IFAs to Government departments and regulatory agencies, Parliament, the Financial Services Authority, the European Commission and other relevant organisations;
• b) To be a research and statistical centre, to aggregate and publish statistics, and to provide analysis on the financial services market relevant to IFAs;
• c) To be a technical centre providing commentary , guidance and advice on all legal , fiscal, financial and other regulatory developments of relevance to independent financial advisers;
• d) to provide a forum for the exchange of non-competitive information;
• e) To promote the concept of independent financial advice;
• f) to provide a focus for media relations.

This constitution may be amended by the AIFA, provided that at least 75% of the members of the AIFA present at the meeting vote in favour of amendments of which prior notice has been given.