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					Report and Accounts
2003 - 2004

                              Association of Independent Financial Advisers | Report and Accounts 2003 - 2004


Association of Independent Financial Advisers

Company Information

Incorporated in England 24th May 1999

Members of the Council 2003-2004

CHAIRMAN                                               AUDITORS
The Rt Hon John Gummer MP                              MacIntyre Hudson          Greenwood House
                                                                                 4/7 Salisbury Court
R W Sanders OBE
                                                                                 EC4Y 8BT
G Bottriell       (Resigned 1 July 2004)
K J Budge         (Resigned 22 January 2004)           BANKERS
P D Beard         (Appointed 27 November 2003)         Barclays Bank             London Corporate Banking
S M Campbell      (Appointed 27 November 2003)                                   PO Box 544
M A Cracknell                                                                    54 Lombard Street
I S Darby         (Resigned 27 November 2003)                                    London
J A M Davidson                                                                   EC3V 9EX
P N C Gale        (Appointed 22 January 2004)
D J Gardner       (Appointed 20 May 2004)
P J Johnston      (Resigned 19 May 2004)               SOLICITORS
G B Kangley       (Resigned 27 November 2003)          Beachcroft Wansbroughs    100 Fetter Lane
B C Kayes                                                                        London
P C R Linnecar                                                                   EC4A 1BN
O McDonald CBE
T F O’Connell
P J C Pratt       (Deceased 24 April 2004)
                                                       REGISTERED OFFICE         100 Fetter Lane
L M S Shields
P H Smee
                                                                                 EC4A 1BN
M J Streatfield

Beach Secretaries Limited                              REGISTERED NUMBER         3779289
100 Fetter Lane
Association of Independent Financial Advisers | Report and Accounts 2003 - 2004


                        Chairman’s Statement                                             The FSA’s version of our menu document shows how the
                                                                                         regulator can turn a straightforward and positive idea into a
                                                                                         thoroughly complex one.
                        Dear Member,
                        The business environment remains challenging for the IFA
                        sector and AIFA alike; there have been key arguments to          Review of FSMA
    The Rt Hon          pursue on a number of fronts. The task of ensuring that the
    John Gummer MP      smaller business is not overwhelmed by a succession of           AIFA will also address the overall burden of regulation in
    Chairman            initiatives gets no easier.                                      our contribution to the two-year review of the Financial
                                                                                         Services and Markets Act (FSMA).
                        The last year did see AIFA record a much better financial
                        result. A combination of tight control over costs and an         We are particularly pleased that the role of the Financial
                        increase in subscriptions after a standstill of five years       Ombudsman Service (FOS) is to be examined in the review.
                        ensured that the organisation’s income exceeded its              AIFA, along with many others in the industry, has been
                        expenditure. We are grateful for members’ support.               concerned that FOS may construct policy in the course of
                                                                                         making specific decisions. It is vitally important that there
                                                                                         are clear and open reasons given for decisions made which
                                                                                         have wider implications.
                        Relations with the FSA
                                                                                         Setting out clearly the standards under which IFAs conduct
                        Much of AIFA’s time has to be spent in negotiation with the      their relationships with clients today, in 2004, may be the
                        Financial Services Authority (FSA). This year saw the            best way of avoiding decisions being revisited by the FOS at
                        departure of the formidable Howard Davies and the arrival        a later date. This is something which we will be considering,
                        of Callum McCarthy, one of whose first public speaking           in consultation with our members, in the year ahead.
                        engagements was at our Annual Dinner in November 2003.
                        Referring in his speech to what Howard had described
                        twelve months earlier (at our 2002 event) as, “... the real
                        business of helping people make plans for their future, and      Depolarisation
                        especially for their retirement”, Callum McCarthy
                        commented, “There is no more important task in financial         Depolarisation has been a long time coming. But the final
                        services today, and there is nobody in a better position to      rules should be published shortly and we can expect the start
                        carry out that task than IFAs. We at the FSA have a major        of the depolarisation process around the end of the year.
                        interest – and interest in many senses of the word – in
                        helping the development of a skilled IFA sector.” On behalf      IFAs have attained their present market position primarily
                        of its members, AIFA will hold the FSA to that undertaking!      through good client relations as well as an independence of
                                                                                         mind which goes beyond a mere regulatory badge. I believe
                        The FSA is also moving from “policy formation” to the            the key challenge for advisers in a depolarised world is to
                        “delivery” phase of regulation. For IFAs, a promised             demonstrate the value of what they do. The menu is an
                        reduction in the publication of numerous consultative            important means to that end.
                        papers was welcome. The cost of regulatory change is high;
                        the cost of staying abreast of regulatory change is high. It     It is too early to say what shape the market will take and we
                        should follow that regulatory change should be a last resort.    are in no hurry to second guess what will happen. But we do
                                                                                         need to review our role and which firms we represent. We
                        AIFA has a frank and robust relationship with the FSA. We        will fully consult members on any proposals for changes to
                        work with the regulator to increase its understanding of our     AIFA’s membership. And, whatever happens, the AIFA values
                        sector and to facilitate the exchange of relevant information.   and emphasis on the giving of high quality advice and
                        But the FSA still has a tendency to be overly prescriptive.      service will persist.
                                                               Association of Independent Financial Advisers | Report and Accounts 2003 - 2004


Treasury Select Committee
In May 2004, AIFA appeared before the Treasury Select
Committee to present evidence as part of its
                                                              The AIFA Council and Staff
                                                              There are many complex issues to tackle in this sector
                                                              and I am grateful to both AIFA’s Council and its staff -
                                                                                                                         The cost of
                                                                                                                         regulatory change is
contribution to the Committee’s inquiry into Restoring        in particular the tireless Paul Smee - for their good      high; the cost of
Confidence in Long-term Savings.                              humour and hard work. I am sure members will               staying abreast of
                                                              recognise how much the IFA sector owes to them.
                                                                                                                         regulatory change is
The final report of the Committee questioned why AIFA
did not have a code of ethics for its members. A              Since November 2003, five members have resigned
                                                                                                                         high. It should follow
recommendation of this nature will require careful            from the Council: Geoff Kangley, Ian Darby, Kevin          that regulatory
scrutiny and it will not be easy to devise something          Budge, Paul Johnston and Gary Bottriell. I thank them      change should be a
which does not duplicate FSA regulation and which             all for their valued contributions. We were greatly        last resort.
adds value. But we will embark on these discussions           saddened to hear that Peter Pratt, who had been a

with our members in the autumn.                               member of the AIFA Council since September 2000,
                                                              died, unexpectedly, in April 2004. We conveyed our
                                                              deepest sympathies to his family.
Financial Capability
                                                              During the year we welcomed: Suzanne Campbell,
Misunderstandings often arise between financial               Paul Beard, Patrick Gale (a re-appointment) and
services companies and their clients because the              Douglas Gardner to the Council. They have already
consumer has little or no understanding of the concept        made their presence felt at our meetings.
of financial planning or of the products they may be
advised to purchase.
                                                              The AMI Board
With this in mind, in October 2003 the FSA set up the
Financial Capability Steering Committee to implement          Splendid progress has been made in establishing a
a national strategy for financial capability. I was invited   representative body for mortgage advisers, I would like
to become a member of the Committee. AIFA is also             to thank AMI’s first Chairman, Charles Gooding, for
involved in this initiative on other levels. Paul Smee, is    navigating his team through the setting up of a new
a member of the generic advice working party and Fay          trade body. Charles decided to stand down as
Goddard, our Director of Policy, is a member of the           Chairman in June 2004. I would like to record the
group examining the role of workplace advice. AIFA has        Council’s thanks to him for all his hard work and
always been keen on promoting and finding ways of             determination in getting AMI ‘up and running’.
extending workplace advice. This, we believe, is the
most effective – and cost effective – method of               AMI held its first Board elections in May 2004. In July
increasing access to, an awareness of, financial              2004, the newly elected Board invited me to become
planning.                                                     AMI’s Chairman and I was delighted to accept the

                                                              The Rt Hon John Gummer MP
Association of Independent Financial Advisers | Report and Accounts 2003 - 2004


                       Report of Director                                        Review of the Year
                       General                                                   I have to report another year of feverish activity.
                                                                                 The burden of regulatory change has hung heavily over
                                                                                 the IFA community and AIFA has been in the front line.

                       Directors’ Report to the
    Paul Smee          Association of Independent                                Depolarisation and the Menu
    Director General   Financial Advisers
                                                                                 The protracted saga of depolarisation continues. Whilst
                       The Council of the Association of Independent             I find it hard to blame the Financial Services Authority
                       Financial Advisers presents herewith the report           (FSA), which, after all, delayed matters to accommodate
                       and the financial statements for the year ended           the AIFA menu proposals, the moves to depolarisation
                       30 June 2004.                                             have been drawn out. It will be 2005 before the final
                                                                                 rules are implemented, some three years after the
                                                                                 notorious CP121.
                       Principal Activity and Future                             In February 2004, I gave a speech to the Insurance
                       Activities                                                Institute of London in which I said that the ending of
                                                                                 polarisation was a watershed in the development of
                       The principal activity of the company during the period   the IFA market but that it did not mean the end of
                       was that of promoting the interests of Independent        independent advice. I recalled that, at its birth,
                       Financial Advisers. The Association of Independent        polarisation was seen as favouring the large sales
                       Financial Advisers and the Association of Mortgage        force, not the independent broker. In a depolarising
                       Intermediaries have continued to represent and            world, I believe that IFAs should hold fast to the values
                       develop their respective roles within the IFA and         of quality and client-centred advice which have stood
                       mortgage community. The results for the financial year    them in such good stead in the past. They should also
                       are in line with budgeted expectations.                   ponder the value of the independent brand.

                                                                                 I also suggest that the menu should be seen as an
                       Auditors                                                  opportunity. It can be used to set out the full range of
                                                                                 an IFA’s services to their clients. Sometimes, I feel that
                       A resolution to re-appoint MacIntyre Hudson               clients do not realise quite what goes on before they
                       Chartered Accountants and Registered Auditors             are given the advice they need; not quite how much of
                       as Auditors will be put to the members at the next        an administrative burden is shouldered by the IFA on
                       annual general meeting.                                   behalf of the client. There is no such thing as free
                                                                                 advice and the advisory community in the future has to
                                                                                 show the value it offers its clients. The menu seems an
                       Small Company Exemptions                                  ideal vehicle for this.

                       This report is prepared in accordance with the special    The FSA published its long-awaited consultation paper
                       provisions of Part VII of the Companies Act 1985          (CP04/3) on the menu system with a feedback
                       relating to small companies.                              statement on its depolarisation paper in February
                                                                                 2004. The FSA’s proposed version of the menu differs
                                                                                 significantly from our original version which focussed
                                                                                 on simplicity and flexibility - the key factors which we
                                                                                 think could make it a success. Instead, the FSA’s draft
                                                                                 version is overly complex and there is a danger that it
                                                                                 will not be read by consumers.
                                                              Association of Independent Financial Advisers | Report and Accounts 2003 - 2004


In our response to the FSA’s CP we said that we              the best case possible to underwriters. This has been
thought the menu had become too cluttered and in the
process could lose its key message. There is a
disproportionate focus on cost - particularly with the
introduction of the market average for commission
                                                             published on the small business section of the FSA
                                                             web site. AIFA has also used every opportunity to pass
                                                             on the relatively good complaints record figures for
                                                             IFAs from the Financial Ombudsman Service (FOS) to
                                                                                                                          I believe that IFAs
                                                                                                                          should hold fast to
                                                                                                                          the values of quality
levels as a comparison with the firm’s maximum levels        PI insurers – and also information about the way in
received. If the menu is to work effectively, it must also   which the FOS is approaching cases.
                                                                                                                          and client-centred
demonstrate value.                                                                                                        advice which have
                                                             During the summer of 2003, the FSA consulted on its
                                                                                                                          stood them in such
But we should focus on the positive potential of the         proposals for a more flexible approach to PI cover (CP
menu. It allows the value of advice to be set alongside      193). Prescribed policy wording was dropped and the          good stead in the
its cost. And the tied sector will be required to disclose   option to trade off PI cover with capital was introduced.    past.
‘commission equivalent’ sums - so there will be              The new rules, which took effect from 1 February 2004,

transparency all round.                                      do allow more flexibility but when the Insurance
                                                             Mediation Directive (IMD - see below) comes into effect
The next stage is that the FSA will publish final rules in
                                                             in January 2005, it is possible that small firms will
the second half of 2004 (probably around October or
                                                             have to hold higher amounts of cover than under the
November). There will then be a transitional period of
                                                             old rules and waivers will not apply under the Directive.
six months from the date on which the rules are made,
during which time firms will be allowed to adopt the         There are signs of increasing activity in the PI market.
new rules provided they comply with all the rules.           But there is a long way to go before we can conclude
                                                             that the market is allocating capacity in an economic
It is too early to predict quite how a post-polarisation
                                                             and efficient fashion. Firms with a long tail of business,
market will look. Certainly we should be looking for
                                                             however good their complaints record, are still
evolution, not revolution, in the market place.
                                                             experiencing difficulties. AIFA will remain actively
                                                             involved in this area.

Professional Indemnity
Insurance Cover                                              PII and Europe
PII has again been a problem area. Perhaps the last          The PII provisions in the IMD, which set minimum
twelve months have been less difficult than the              standards across the EU for the sale and
preceding twelve but it is all a matter of degree. Many      administration of both general insurance and life
IFAs have been experiencing real problems in trying to       assurance, are a cause for concern. In our response to
obtain PI cover and, if they have been offered it, the       CP 201 in February 2004, which covered the
premiums and the excess levels have been high. We            implementation of the IMD, we recorded our opposition
have helped some firms individually with problems and        to the high level of cover demanded for the smallest
we have worked with regulator and PI market alike to         firm by the Directive. AIFA was grateful that the
try and restore some moderation into PI assessments          Government, at our prompting, managed to secure
of the risks posed by IFA firms. We have been keen to        some reduction in the originally proposed levels. But
encourage proper risk assessments of businesses. The         we still feel that the prescribed levels in the Directive
FSA held its first PI Forum in July 2003, which brought      are too high and will force firms to obtain expensive
all relevant parties together, including AIFA, to discuss    cover which they do not need – always assuming that
the issues involved. Since then a further four meetings      any cover is available. There is growing evidence of
have taken place. As a result of these discussions, two      concern amongst other intermediaries in the EU about
projects were set-up in which AIFA has been working          the restricted capacity in the market.
directly with the PI market. One project involved
producing a check-list for IFAs so that they can make
Association of Independent Financial Advisers | Report and Accounts 2003 - 2004


                                AIFA will continue to press for suitable amendment to       advice. This could then be used as an entry level and
                                the Directive, as part of the review of PII provisions      training ground for graduates and other young people
                                required by the Markets in Financial Instruments            who wish to enter the industry. But this will depend on
                                Directive (formerly known as the Investment Services        the concept of a second-class basic advice process
                                Directive). I should acknowledge the excellent support      being replaced by a more appropriate concept of
                                we are receiving from the FSA whose Chief Executive         “focused advice”. This would involve a truncated and
                                indicated at their Annual Public Meeting in July 2004       circumscribed advice process but one which was
                                that they intended to continue to exercise all available    conducted by someone sufficiently trained to
    Fay Goddard
                                regulatory discretion in this area.                         understand the information given by a consumer.
    Director of Policy &
    Technical Services

                                The New Stakeholder Products                                Examination Review and the
                                In June 2004, after a long period of consultation           Financial Services Skills
                                initiated by Ron Sandler’s review of the retail savings     Council
                                industry (July 2002) HM Treasury finally published its
                                decision on the charge caps for the new stakeholder         AIFA has participated in all stages of the evolving
                                products and the FSA published its proposals for the        examination review since the FSA first proposed its
                                selling regime under which they would be sold.              “single clear framework” in 1999. A consistent, clear
                                                                                            approach to industry qualifications is necessary if we
                                HMT announced that it has decided to set the charges        are to move forward and develop as a profession.
                                cap for the new stakeholder products at 1.5% for the
                                first ten years that the product is held and 1%             In September 2003, the new Financial Services Skills
                                thereafter. In reaching its decision, the Government        Council unveiled its framework for examinations
                                has taken into account that stakeholder needs to be         relating to investment advice and in early 2004, it
                                sold with advice, albeit with what the Treasury and the     published a consultative paper – Assuring the Quality of
                                FSA are now calling ‘basic advice’.                         Appropriate Examinations. Whilst we have been
                                                                                            supportive of the move away from FSA approved
                                Since the first appearance of what were called              examinations to appropriate exams and of the Skills
                                ‘simplified products’, it was clear to us (and to many      Council’s modular approach to the exam framework,
                                others in the industry) that if stakeholder holder          we have voiced some concerns.
                                products incorporated equities, then advice would be
                                needed to explain the risks involved – even if those        In April 2004, we published our response to the Skills
                                risks were “controlled risks”. We said that advice          Council’s consultative paper, in which we stated that
                                would be needed to help identify whether or not it was      we were concerned that it was not assuming
                                suitable for a particular client to take such a risk. The   responsibility for setting the level of examinations and
                                FSA is now proposing that these products would be           that it was not indicating what minimum qualifications
                                sold via a ‘basic advice’ regime. AIFA remains              were appropriate for specific advisory roles. Instead, it
                                concerned that basic advice is an unsatisfactory half-      was being proposed that the responsibilities would be
                                way house between selling products and providing full       shared between the Skills Council and the Qualifications
                                advice. We believe the process will devalue advice;         and Curriculum Authority and the awarding bodies
                                encourage mis-buying; and will lead to problems when        (such as the Chartered Insurance Institute).
                                the Financial Ombudsman Service has to determine
                                whether or not mis-selling has occurred.

                                Perhaps the best use of stakeholder for IFAs would be
                                to encourage new recruits into the industry. IFA firms
                                could have a separate arm of their firm providing basic
                                                            Association of Independent Financial Advisers | Report and Accounts 2003 - 2004


We also said that the Skills Council should encompass
a wider degree of responsibility to ensure that:

• minimum exam requirements to give investment
  advice are clearly defined;
                                                           Anti-Money Laundering
                                                           In July 2003 we were pleased that the FSA announced
                                                                                                                      . . . we should be
                                                                                                                      looking for evolution,
                                                           that it would not be introducing a review of the           not revolution in the
• standards deliver a qualification which is set at a      identification of existing customers by regulated firms    market place.
  level at least equivalent to the current FPC;            for anti-money laundering purposes. The decision was
                                                           made after an extensive cost benefit analysis

• methods of assessment are robust;
                                                           conducted by PWC and considerable input and lobbying
• there is a consistent approach to qualifications;        by many sectors of the industry including AIFA. We
                                                           welcomed this sensible decision. A mandatory review
• qualifications are clearly recognisable by both
                                                           of existing customers’ identity would have been an
  industry and consumers;
                                                           onerous and costly task for small firms.
• qualifications are readily portable from one company
  to another.

We believe the Skills Council is now on the right track.
                                                           IFA Census - Survey of
We are keen to continue working with the Council to        Members
achieve an examination framework which the industry
needs and wants. I am most grateful to AIFA’s Director     In January 2004 we launched IFA Census – a monthly
of Policy, Fay Goddard, for her work on this front,        on-line survey of our members’ attitudes and opinions
especially with development of the ISO standard for        about relevant topics - with our sponsoring market
personal financial planning.                               research partners, NMG. There are many surveys
                                                           seeking IFA views on industry and regulatory matters
                                                           and the aim of IFA Census is to become the industry
                                                           source of information about the sector thereby
Endowments                                                 replacing the need for any other surveys. One of the
Whilst mortgage endowments have dominated the              main differences with our survey is that IFAs also
pages of the personal finance press over the last          receive feedback about some of the results and we are
twelve months, we should indicate that less than 10        able to feed these results into our policy or lobbying
per cent of complaints about endowments made to the        work. The first survey we carried out covered the issue
Financial Ombudsman Service are made against IFAs          of product providers’ call centres – a subject on which
and that only twenty percent of those that go to           IFAs have plenty to say! We fed the results into the
adjudication are upheld. This is a record in which some    Raising Standards* working party on administration
pride can be taken.                                        standards, which had agreed to look at call centres as
                                                           its first issue. Subsequent surveys have included topics
In June 2004, new rules brought in on time-barring         such as the menu system; fee rates and projections.
endowment complaints, which were agreed between            We intend to continue surveying members for the
the FSA and the Association of British Insurers, mean      foreseeable future.
that consumers must be notified of the latest date by
which they can make a complaint to the FOS. We
believe these new rules, if inappropriately
implemented, could cause IFAs serious administration
problems and PI difficulties. We are perplexed that they   * The Raising Standards Quality Mark Scheme was
                                                           launched in October 2000. It is a voluntary scheme
could have been introduced without proper discussion       open to providers of financial products.
with IFA representatives.
Association of Independent Financial Advisers | Report and Accounts 2003 - 2004


                                Association of Mortgage
                                AMI was officially launched in May 2003 following the
                                appointment of Chris Cummings as the Association’s
                                                                                          A consistent, clear
                                                                                          approach to industry
                                Director. Under Chris’s inspiring leadership, the
                                                                                          qualifications is
                                fledgling trade body has quickly grown in stature and     necessary if we
    Tracey Mullins              has made a direct impact on the FSA’s regulatory          are to move forward
    Director of                 provisions for the mortgage industry in the run up to     and develop as a
    Public Affairs              statutory regulation in October 2004. With over 10,000
                                members (July 2004) AMI has successfully filled the
                                position as the voice of the mortgage intermediary.
                                A key role for AMI over the past year has been to
                                provide its members with invaluable support and
                                guidance through the authorisation process. AIFA
                                members, many of whom are active in the mortgage
                                market, have also benefited from the additional
                                expertise and input we are now able to provide in this
                                area. I would like to congratulate Chris and his team
                                for achieving so much in such a short period of time.

                                *For a more detailed report on AMI’s activities, please
                                see Chris Cummings’ report on page 9

                                AIFA’s Staff
                                None of the AIFA staff expect an idle life. All have
                                performed above and beyond the call of duty this year.
                                I am most grateful to them. Members should be as well.

                                Paul Smee
                                Director General
                                                           Association of Independent Financial Advisers | Report and Accounts 2003 - 2004


Association of Mortgage
Review of the Year
The first year of activity for any new enterprise is      AMI was accordingly heavily involved in the FSA’s
usually a hectic one. Starting a new trade body in the    consultation processes around the mortgage rules and
midst of tumultuous change brought about by               also those covering general insurance. As well as
emerging regulation, uncertainty about the future of      making sure the intermediary voice was heard, we
the market, and a mortgage industry encountering          were able to influence the debate to protect members’
high levels of demand, was always going to be a           interests and achieve several key policy “wins”. Our
challenge. However, with industry support and a           presence was also felt on the regulatory costs: our
rapidly growing membership base, AMI has quickly          lobbying contributed to the FSA’s decision to reduce          Chris Cummings
established itself as the natural voice of the mortgage   the application fees for small firms and offer a                 Director AMI
intermediary community.                                   discount period for early application. We are also
                                                          lobbying to have periodic fees reduced. Additionally, we
We have focused on four key areas during AMI’s first      saw the abandonment of the FSA’s plan to require
year of operations:                                       small firms to produce regulatory business plans.

● Developingpolicy to respond to, and prompt, the         We have also been in close liaison with the Financial
 Financial Services Authority (FSA) when drawing up       Ombudsman Service (FOS) to build their understanding
 mortgage and general insurance regulation;               of the mortgage intermediary community. This should
                                                          benefit members who are new to the Ombudsman.
● Seeking to influence the development of the new
 mortgage and general insurance qualifications            AMI also represented members on the wider policy
 brought in through the Financial Services Skills         agenda. This year saw both Professor David Miles and
 Council’s review;                                        Kate Barker commissioned to conduct reviews of the
                                                          mortgage and housing market. AMI supplied
● Building
         our profile with policy makers, regulators       information to both reviews and held several positive
 and other bodies of influence so that the mortgage       meetings with Professor Miles.
 intermediary voice is heard;
                                                          Our policy work continues. Regulatory reporting,
● Servingthe needs of our members through the             insurance issues, and on the European stage, the
 services we offer.                                       Consumer Credit Directive (apparently, over 70% of all
                                                          proposals for new financial services regulation emerge
                                                          from Brussels) all loom large.
AMI was established on 16 April 2003, as the FSA was      Appropriately Qualified
gearing up to engage in major consultation with the
industry on the shape and nature of mortgage              The last year saw the FSA hand the baton of
regulation. Our arrival provided the FSA with an          qualifications to the Skills Council, in a move from
industry body with which they could actively consult      “approved” to “appropriate” qualifications. This has an
and one that would represent the views of the whole of    immediate impact on the mortgage market as its exams
the mortgage intermediary community rather than the       are based around the Mortgage Code which comes to
commercial interests of individual companies. AMI was     an end with the introduction of statutory regulation.
soon included in the industry groups brought together
by the FSA to discuss its proposals.
Association of Independent Financial Advisers | Report and Accounts 2003 - 2004


                                The awarding bodies (e.g. the Institute of Financial      Member Value
                                Services and the Chartered Insurance Institute) now
                                need to turn the Skills Council’s work into appropriate   A trade body is only as good as its members believe it
                                qualifications that reflect the demands of the market     is. Since inception we have worked hard to ensure
                                whilst protecting the consumer. AMI calls on these        members feel they derive great value from AMI. While
                                organisations to develop challenging but attainable       much of the payback on our work is not immediately
                                qualifications which help to build professionalism in     apparent, as its nature is long-term (regulation is often
                                our sector.                                               a slow-burn process), we have also set out to ensure day-
                                                                                          to-day delivery of services for the benefit of members.

                                Active Representation                                     The AMI technical guides and factsheets have been
                                                                                          widely praised by members both for their practical
                                AMI was set up to ensure the mortgage intermediary        nature and their “Plain English” style. The member
                                community was represented effectively. Many have an       Helpdesk was set up to assist members with
                                influence over our market: the Treasury, the DTI, the     regulatory and compliance questions – and we are
                                OFT, the FSA, the FOS and Europe. AMI has set out to      often told it is worth the membership fee alone!
                                ensure our industry’s voice is heard in all those
                                quarters and we have made good initial contacts.          We are particularly pleased to have a thriving regional
                                                                                          structure. Each region of the UK: England, Scotland,
                                We have endeavoured to provide constructive,              Wales and Northern Ireland has an AMI chapter and I
                                intellectually robust and well-argued comment.            would like to thank our regional chairpeople for their
                                However, we have not shied away from being critical       contribution to AMI’s success.
                                where we felt it necessary in order to protect
                                members’ interests.
                                                                                          AMI Board
                                Our impact on regulation is easy to see. From changes
                                in FSA policy and fees, to recognition in the Miles’      AMI now has an elected Board. In June this year, AMI
                                report of the importance of intermediaries, to the        members had the opportunity to elect the people who
                                Treasury’s decision to regulate home reversions, AMI      would set the policy agenda for the trade body. We had
                                has been championing the mortgage intermediary            a very pleasing response from members, not only in
                                sector with success.                                      terms of the number who put themselves forward, but
                                                                                          also the many thousand who voted. As with any
                                We have also sought to build close working                election, some of the Establishing Board left us at that
                                relationships with others of influence in our market.     stage and it is only right that I should thank them for
                                We see this as essential work as better dialogue          their work and vision in helping to lay the foundations
                                between lender groups and intermediaries can only         for AMI.
                                help the market work better. The Intermediary
                                Mortgage Lender’s Association (IMLA) and the Council      The AMI Board decided to appoint a Chairman from
                                of Mortgage Lenders (CML) have been very supportive       outside the mortgage market. The Rt. Hon John
                                of AMI in our early days.                                 Gummer MP, was offered the role, and, I am pleased to
                                                             Association of Independent Financial Advisers | Report and Accounts 2003 - 2004


say, accepted it. We hope that his considerable
experience will add to AMI’s standing. In support of
John are two deputy chairmen: Ray Boulger, of Charcol
(a directly authorised firm) and Stephen Smith from
                                                                                                            AMI has quickly
                                                                                                            established itself as
Legal & General Partnership (a network). The choice                                                         the natural voice of
of an external Chairman assisted by leading                                                                 the mortgage
representatives of both sides of the regulatory divide,
demonstrates AMI’s commitment to represent the
market as a whole.

Our Work Continues
To date we have fought a “phoney war” of talking about
regulation. The real event will not occur until regulation
actually commences and we see how it takes shape.
AMI is already working with the regulator on likely
issues and how we can ensure a smoother market.

However, AMI also focuses on helping members thrive
in a changing market. This includes access to, and cost
of PI insurance, effective training and competency, as
well as addressing the issues of the day.

One thing is for certain; the first year of a market’s
introduction to statutory regulation is “interesting”.
We expect to be busier than ever and will seek to serve
our members as they grow their businesses. No one
joins a trade body for the glamour, or for a quiet life
and I would like to thank the AMI staff, and wider AIFA
team for their hard work and commitment.

Chris Cummings
Director AMI
Association of Independent Financial Advisers | Report and Accounts 2003 - 2004


                Statement of Directors’
                Company law requires the directors to prepare financial
                statements for each financial year which give a true and fair view
                of the state of affairs of the company and of the profit or loss of
                the company for that period. In preparing those financial
                statements, the directors are required to:

                • select suitable accounting policies and then apply them

                • make judgements and estimates that are reasonable and

                • prepare the financial statements on a going concern basis
                  unless it is inappropriate to assume that the company will
                  continue in business.

                The directors are responsible for keeping proper accounting
                records which disclose with reasonable accuracy at any time the
                financial position of the company and to enable them to ensure
                that the financial statements comply with the Companies Act
                1985. They are also responsible for safeguarding the assets of
                the company and hence for taking reasonable steps for the
                prevention and detection of fraud and other irregularities.

                On behalf of the Council

                The Rt Hon John Gummer MP
                16th September 2004
                                                               Association of Independent Financial Advisers | Report and Accounts 2003 - 2004


Auditors' Report to the
Members of the AIFA
We have audited the financial statements of the Association of              Basis of Audit Opinion
Independent Financial Advisers for the year ended 30 June 2004 which
comprise the Profit and Loss Account, the Balance Sheet and the             We conducted our audit in accordance with United Kingdom Auditing
related notes. These financial statements have been prepared under          Standards issued by the Auditing Practices Board. An audit includes
the historical cost convention [as modified by the revaluation of certain   examination, on a test basis, of evidence relevant to the amounts and
fixed assets] and the accounting policies set out therein.                  disclosures in the financial statements. It also includes an assessment
                                                                            of the significant estimates and judgments made by the directors in the
This report is made solely to the company’s members, as a body, in          preparation of the financial statements, and of whether the accounting
accordance with Section 235 of the Companies Act 1985. Our audit            policies are appropriate to the company’s circumstances, consistently
work has been undertaken so that we might state to the company’s            applied and adequately disclosed.
members those matters we are required to state to them in an
auditor’s report and for no other purpose. To the fullest extent            We planned and performed our audit so as to obtain all the information
permitted by law, we do not accept or assume responsibility to anyone       and explanations which we considered necessary in order to provide us
other than the company and the company’s members as a body, for our         with sufficient evidence to give reasonable assurance that the financial
audit work, for this report, or for the opinions we have formed.            statements are free from material misstatement, whether caused by
                                                                            fraud or other irregularity or error. In forming our opinion we also
Respective Responsibilities of the                                          evaluated the overall adequacy of the presentation of information in the
Directors and Auditors                                                      financial statements.

The directors’ responsibilities for preparing the Annual Report and the     Opinion
financial statements in accordance with applicable law and United
Kingdom Accounting Standards are set out in the Statement of                In our opinion the financial statements give a true and fair view of the
Directors’ Responsibilities.                                                state of the company’s affairs as at 30 June 2004 and of its surplus for
                                                                            the year then ended and have been properly prepared in accordance
Our responsibility is to audit the financial statements in accordance       with the Companies Act 1985. We planned and performed our audit so
with relevant legal and regulatory requirements and United Kingdom          as to obtain all the information and explanations which we considered
Auditing Standards.                                                         necessary in order to provide us with sufficient evidence to give
                                                                            reasonable assurance that the financial statements are free from
We report to you our opinion as to whether the financial statements         material misstatement, whether caused by fraud or other irregularity
give a true and fair view and are properly prepared in accordance with      or error. In forming our opinion we also evaluated the overall adequacy
the Companies Act 1985. We also report to you if, in our opinion, the       of the presentation of information in the financial statements.
Directors’ Report is not consistent with the financial statements, if the
company has not kept proper accounting records, if we have not
received all the information and explanations we require for our audit,
or if information specified by law regarding directors’ remuneration and
transactions with the company is not disclosed.
                                                                            MacIntyre Hudson
We read other information contained in the Annual Report, and               Chartered Accountants & Registered Auditor
consider whether it is consistent with the audited financial statements.    25th August 2004
This other information comprises only the Directors’ Report, the
Chairman’s Statement and the Operating and Financial Review. We             Greenwood House
consider the implications for our report if we become aware of any          4/7 Salisbury Court
apparent misstatements or material inconsistencies with the financial       London EC4Y 8BT
statements. Our responsibilities do not extend to any other information
beyond that referred to in this paragraph.
Association of Independent Financial Advisers | Report and Accounts 2003 - 2004


                 Income and Expenditure Account
                 Year Ended 30th June 2004

                                                         Notes                      2004                          2003
                                                                           £                 £              £                £

                 Turnover                                        1

                 Net Operating Expenses

                   Office and Establishment                                304,850                          283,096

                   Marketing and Distribution                                  76,210                        47,127

                   Administration                                          681,375                          510,406

                   Legal and financial                                     110,391                          199,066

                                                                                           (1,172,826)                    (1,039,695)

                 Operating (Loss)                                2                               (4,735)                     (87,898)

                   Interest receivable                                                            6,101                          6,809

                 Surplus / (Loss) on ordinary                                                     1,366                      (81,089)
                 activities before taxation

                   Taxation                                      5                                  382                          (905)

                 Surplus / (Loss) on ordinary                                                     1,748                      (81,994)
                 activities after taxation

                 • All the Company’s activities were classed as continuing.
                 • There were no recognised gains or losses for the year other than the operating surplus for the year.
                 • Movement in reserves are shown in the notes to the financial statements.
                 • None of the Company’s activities were discontinued during the financial year.

                 The notes on pages 16 to 18 form an integral part of these accounts.
                                        Association of Independent Financial Advisers | Report and Accounts 2003 - 2004


Balance Sheet as at 30th June 2004

                                        Notes                    2004                          2003

                                                           £             £              £               £

 Fixed Assets

    Tangible assets                              6                       11,539                          10,101

 Current Assets

    Debtors and prepayments                      7         53,071                        35,059

    Cash at bank and in hand                              269,296                       168,302

                                                          322,367                       203,361

 Current Liabilities

    Amounts falling due within
                                                 8        413,878                       295,182
    one year

 Net Current (Liabilities)                                              (91,511)                        (81,720)

 Total Assets Less Current
                                                                        (79,972)                        (81,720)

 Long Term Liabilities

    Amounts falling due after
                                                 9                            –                                  –
    more than one year

 Net (Liabilities)                                                      (79,972)                        (81,720)

 Capital Reserves

    Profit and loss account                     10                      (79,972)                        (81,720)

 Total Reserves                                                         (79,972)                        (81,720)

These financial statements are prepared in accordance with the special provisions of Part VII of the Companies
Act 1985 relating to small companies.
The financial statements on page 14 to 18 were approved by the Board of Directors on 16th September 2004 and
signed on its behalf by:

The Rt Hon John Gummer MP

The notes on pages 16 to 18 form an integral part of the accounts.
Association of Independent Financial Advisers | Report and Accounts 2003 - 2004


                Notes to the accounts
                Year Ended 30th June 2004

                1. Accounting Policies

                  The principal accounting policies that are adopted in the preparation of the financial statements are set out below:

                a) Basis of accounting
                   The financial statements are prepared on a going concern basis. The company has taken advantage of the exemption
                   from preparing a cash flow statement conferred by Financial Reporting Standard Number 1 (Revised 1996) on the
                   grounds that it qualifies as a small company under the Companies Act 1985.
                b) Turnover
                   Turnover represents the amounts derived from subscriptions and receivable from members in respect of the financial year.
                c) Tangible fixed assets
                   Depreciation is provided at rates calculated to write off each asset over its estimated useful life. The principal annual
                   rates in use are:
                  Furniture and fittings            - 25% straight line
                  Computer equipment                - 25% straight line
                  The depreciation policy was changed in 2001 from 25% reducing balance method to 25% straight line as it is considered to be
                  a more appropriate basis of allocating the cost of the Association’s fixed assets over their useful economic lives.
                  A full years charge is made in the year of acquisition and none in the year of disposal.
                d) Membership Contributions
                   Membership Contributions are charged to the profit and loss account as they become payable in accordance with the
                   rules of the scheme.
                e) Defined Contribution Pension Scheme
                   The company operates a defined contribution scheme. The assets of the scheme are held separately from those of the
                   company in an Independently Administered Fund.

                2. Operating Surplus
                The operating surplus is stated after charging:
                                                               2004           2003
                                                                £              £
                  Depreciation                                   9,070         17,145
                  Auditor’s Remuneration                         5,650          4,700

                3. Staff Costs
                                                               2004           2003
                                                                £              £
                  Wages and Salaries                           519,596        403,104
                  Social Security costs                         59,994         43,998
                  Pension costs                                 62,891         44,274

                                                               642,481        491,366

                The average weekly number of employees during the year was as follows:

                                                               2004           2003
                                                                No.            No.
                  Office and Management                               11             9

                (During the year both AIFA & AMI appointed new members of staff)

                Defined Contribution Pension Scheme
                The pension cost charge represents contributions payable by the company to the fund and amounted to £62,891 (2003: £ 44,274)
                including contributions in respect of employees.

                4. Directors
                                                               2004           2003
                                                                £              £
                  *Directors Remuneration                      158,142        154,145

                (*Inclusive of Employers National Insurance)
                                              Association of Independent Financial Advisers | Report and Accounts 2003 - 2004


The current and prior years Financial Statements represent a full year of Director Remuneration.

During the current financial year the following number of directors accrued retirement benefits under:

                                              2004           2003
                                               No.            No.
 Money Purchase Pensions Schemes                     1              1

5. Taxation
The company is a member association that does not trade with organisations outside its own membership and it therefore has no
liability to UK Corporation Tax for trading income. The corporation tax charge arises on capital gains made and interest received
in the year.

6. Tangible Fixed Assets
                                         Fixtures and        Computer
                                            Fitting          Equipment
                                               £                 £                       £
   At 1 July 2003                                32,507             36,075                   68,582
   Additions                                      1,889              8,619                   10,508

    At 30 June 2004                             34,396              44,694                   79,090

   At 1 July 2003                                29,228             29,258                   58,481
   Charge for the year                            2,236              6,744                    9,070

    At 30 June 2004                             31,554              35,997                   67,551

 Net Book Value
   At 30 June 2004                                2,842              8,697                   11,539

    At 30 June 2003                               3,279                 6,822                10,101

7. Debtors
                                              2004           2003
                                               £              £
 Trade debtors                                 13,307          4,152
 Other debtors                                  8,668          5,150
 Prepayments                                   31,096         25,757
                                               53,071         35,059

8. Creditors – amounts falling due within one year
                                              2004           2003
                                               £              £
 Trade creditors                               21,944         18,602
 Social security and other taxes               20,239         17,331
 Accruals and deferred income                 371,395        258,569
 Corporation tax                                  300            680
                                              413,878        295,182

Included within accruals and deferred income is £346,415 (2003: £ 239,284) relating to contributions received in advance for future
periods of membership. Of this £103,000 (2003: £58,000) relates to AMI subscriptions received in advance relating to the
2003/2004 forthcoming year.
The balance of the deferral, £243,000, is consistent with prior year treatment of AIFA membership subscriptions.
Association of Independent Financial Advisers | Report and Accounts 2003 - 2004


                Notes to the accounts
                Year Ended 30th June 2004 (continued)

                9. Creditors – amounts falling due after more than one year
                                                             2004           2003
                                                              £              £
                  Deferred Income                                   –              –
                                                                    –              –

                Subscriptions received during 2003/2004 related to one year membership renewals. Accordingly, there is no provision for
                subscriptions received in advance due after more than one year.

                10.         Reserves
                  At 1 July 2003                               (81,720)

                  Retained surplus for the financial year        1,748

                  At 30 June 2004                              (79,972)

                The transfer from the Income and Expenditure accounts to retained reserves for the financial year includes losses of £(32,502)
                relating to the trading results of AMI. AIFA returned a gross surplus of £33,868.

                11.         Reconciliation of Movements
                            on Members’ Funds
                                                             2004           2003
                                                              £               £
                  Surplus / (Loss)for the financial year       1,748        (81,994)

                  Opening members’ funds                     (81,720)           274

                  Closing members’ funds                     (79,972)       (81,720)

                12.         Guarantees
                Members’ liability is limited to £1.

                13.         Related Party Transactions
                With the exception of The Rt Hon John Gummer MP, O’McDonald OBE and P H Smee, all other members of the Council for
                2003 – 2004 were fully subscribed members of the Association of Independent Financial Advisers. There were no other related
                party transactions.
                                        Association of Independent Financial Advisers | Report and Accounts 2003 - 2004


Income and Expenditure Account
Year Ended 30th June 2004

                                                          2004                           2003

                                                 £                 £            £                 £

Total Income

  Subscription contributions (Annual)            729,119                        569,223

  Subscription contributions (Annual)            408,455                        367,750

                                                                  1,137,574                        963,973

  NAMBA                                          –                                   8,500

  Other Income                                       30,517                          6,324

                                                                       30,517                         14,824

                                                                  1,168,091                        951,979

Net Operating Expenses

  Office and establishment                       304,850                        283,096

  Marketing and distribution                         76,210                         47,127

  Administration                                 681,375                        510,406

  Legal and financial                            110,391                        199,066

                                                                 (1,172,826)                    (1,039,695)

Operating (Loss)                                                     (4,735)                       (87,898)

  Interest receivable                                                   6,101                          6,809

Net Profit / (Loss) on ordinary
                                                                        1,366                      (81,089)
activities before taxation
Association of Independent Financial Advisers | Report and Accounts 2003 - 2004


                Detailed Income and Expenditure Account
                Year Ended 30th June 2004

                                                                     2004                          2003
                                                            £               £            £                £
                 Net Operating Expenses
                 Office and establishment
                   Stationery                                    5,115                         4,902
                   Printing                                     35,449                         9,927
                   Postage                                       7,046                         5,604
                   Communications                               19,395                        25,522
                   Technical and systems                        29,918                        31,368
                   Website maintenance                          12,917                        10,207
                   Lease                                        34,921                        36,012
                   Insurance                                     6,974                         3,993
                   Office cleaning                               5,411                         6,154
                   Rates, rent, service charge               135,649                         140,687
                   Office expenses                              12,055                         8,405

                                                                             304,850                          283,096

                 Marketing and distribution
                   Regional budget                               3,050                         7,954
                   Travel and subsistence                       25,251                        15,185
                   Marketing                                    33,765                        18,068
                   Publications                                  5,892                         2,734
                   Entertaining                                  8,252                         3,186

                                                                                76,210                         47,127

                   Salaries and wages – Director             138,000                         138,000
                   Salaries and wages – Staff                381,596                         265,104
                   Employers National Insurance                 59,994                        43,988
                   Pensions                                     62,891                        44,274
                   Staff training                                2,470                           94
                   Temporary staff                          –                            –
                   Board expenses                               36,424                        18,946

                                                                             681,375                          510,406

                 Legal and financial
                   Bank charges                                  5,666                         4,542
                   Legal expenses                               11,655                        29,781
                   Accountancy                                   6,134                        15,157
                   Auditors                                      5,650                         4,700
                   Public affairs                               17,224                        74,061
                   Other consultancy                            16,871                        13,387
                   Depreciation                                  9,070                        17,145
                   European costs – BIPAR                       25,340                        18,790
                   Polarisation – CP121                             –                         10,000
                   AGM expenses                                 12,871                        11,503
                                                                             110,391                          199,066

                 Total Expenditure                                          1,172,826                     1,039,695
                                        Association of Independent Financial Advisers | Report and Accounts 2003 - 2004


Detailed Income and Expenditure Account
Year Ended 30th June 2004 (AIFA Trading Only)

                                                          2004                          2003

                                                 £               £             £               £

Total Income

  Subscription contributions (Annual)            520,300                       561,184

  Subscription contributions (Annual)            357,370                       365,014

                                                                 877,670                       926,198

  Other Income                                        8,879                         6,324

                                                                      8,879                        6,324

                                                                 886,549                       932,522

Net Operating Expenses

  Office and establishment                       224,242                       255,949

  Marketing and distribution                         35,360                        40,708

  Administration                                 502,192                       486,995

  Legal and financial                                96,988                    183,170

                                                                 858,782                       966,822

Operating Surplus / (Loss)                                           27,767                    (34,300)

  Interest receivable                                                 6,101                        6,809

Net Profit / (Loss) on ordinary
                                                                     33,868                    (27,491)
activities before taxation
Association of Independent Financial Advisers | Report and Accounts 2003 - 2004


                Detailed Income and Expenditure Account
                Year Ended 30th June 2004 (AIFA Trading Only)

                                                                      2004                          2003
                                                            £                £            £                £
                 Net Operating Expenses
                 Office and establishment
                   Stationery                                    4,520                          4,606
                   Printing                                      9,427                          6,934
                   Postage                                       5,707                          5,453
                   Communications                               18,042                         25,127
                   Technical and systems                        23,111                         22,289
                   Website maintenance                           3,939                          2,770
                   Lease                                        33,692                         35,908
                   Insurance                                     6,235                          3,895
                   Office cleaning                               4,152                          5,913
                   Rates, rent, service charge               106,053                          134,664
                   Office expenses                               9,364                          8,390

                                                                             224,242                           255,949

                 Marketing and distribution
                   Regional budget                              (1,721)                         7,954
                   Travel and subsistence                       10,977                         14,996
                   Marketing                                    18,671                         11,838
                   Publications                                  5,727                          2,734
                   Entertaining                                  1,706                          3,186

                                                                                 35,360                         40,708

                   Salaries and wages – Director             115,000                          131,875
                   Salaries and wages – Staff                256,515                          250,386
                   Employers National Insurance                 46,969                         42,378
                   Pensions                                     50,363                         43,926
                   Staff training                                2,073                            94
                   Temporary staff                                   –                             –
                   Board expenses                               31,272                         18,336

                                                                             502,192                           486,995

                 Legal and financial
                   Bank charges                                  4,503                          4,520
                   Legal expenses                               11,655                         19,318
                   Accountancy                                   5,634                         11,045
                   Auditors                                      4,900                          4,700
                   Public affairs                               16,192                         73,587
                   Other consultancy                             8,795                         13,387
                   Depreciation                                  7,098                         16,320
                   European costs – BIPAR                       25,340                         18,790
                   Polarisation – CP121                              –                         10,000
                   AGM expenses                                 12,871                         11,503
                                                                                 96,988                        183,170

                 Total Expenditure                                           858,782                           966,822
                                          Association of Independent Financial Advisers | Report and Accounts 2003 - 2004


Detailed Income and Expenditure Account
Year Ended 30th June 2004 (AMI Trading Only)

                                                               2004                                 2003

                                                      £                  £                 £                  £

 Total Income

    Subscription contributions (Annual)                280,819                                  8,039

    Subscription contributions (Annual)                   51,085                                2,736

                                                                         259,904                                   10,755

    Other Income
                                                          21,368                                8,500
    (including NAMBA funding : 2003 only)
                                                                             21,638                                 8,500

                                                                         281,542                                   19,275

 Net Operating Expenses

    Office and establishment                              80,608                               27,147

    Marketing and distribution                            40,850                                6,419

    Administration                                     179,183                                 23,411

    Legal and financial                                   13,403                               15,896

                                                                         314,044                                   72,873

 Operating Loss                                                          (32,502)                             (53,598)

    Interest receivable                                                          –                                     –

 Net Loss on ordinary activities before
                                                                         (32,502)                             (53,598)

Note: AMI is a division of AIFA and is not a separate legal entity. As a result, AMI activities are disclosed as
part of the report and accounts for AIFA.

AMI traded for a full 12 months during 2003/2004. 2002/2003 comparatives represent 3 months of trading.
Association of Independent Financial Advisers | Report and Accounts 2003 - 2004


                Detailed Income and Expenditure Account
                Year Ended 30th June 2004 (AMI Trading Only)

                                                                              2004                                 2003
                                                                     £                  £                 £                  £
                 Net Operating Expenses
                 Office and establishment
                    Stationery                                             595                                  296
                  * Printing                                             26,022                                2,993
                    Postage                                               1,339                                 151
                    Communications                                        1,353                                 395
                    Technical and systems                                 6,807                                9,394
                  * Website maintenance                                   8,978                                7,437
                    Lease                                                 1,229                                 104
                    Insurance                                              739                                   98
                    Office cleaning                                       1,259                                 241
                    Rates, rent, service charge                          29,596                                6,023
                    Office expenses                                       2,691                                  15

                                                                                            80,608                               27,147

                 Marketing and distribution
                    Regional budget                                       4,771                                   –
                    Travel and subsistence                               14,724                                 189
                  * Marketing                                            15,094                                6,230
                    Publications                                           165                                    –
                    Entertaining                                          6,546                                   –

                                                                                            40,850                                6,419

                    Salaries and wages – Director                        23,000                                6,125
                    Salaries and wages – Staff                         125,081                                14,718
                    Employers National Insurance                         13,025                                1,610
                    Pensions                                             12,528                                 348
                    Staff training                                         397                                    –
                    Board expenses                                        5,152                                 610

                                                                                         179,183                                 23,411

                 Legal and financial
                    Bank charges                                          1,163                                  22
                    Legal expenses                                           –                                10,463
                    Accountancy                                            500                                 4,112
                    Audit                                                  750                                    –
                    Public affairs                                        1,032                                 474
                  * Other consultancy                                     7,986                                   –
                    Depreciation                                          1,972                                 825
                                                                                            13,403                               15,896

                 Total Expenditure                                                       314,044                                 72,783

                * Included within the above categories are initial start up costs relating to the formation of AMI (£42,087).

                Note: AMI is a division of AIFA and is not a separate legal entity. As a result, AMI activities are disclosed as part
                of the report and accounts for AIFA. AMI traded for a full 12 months during 2003/2004. 2002/2003 comparatives
                represent 3 months of trading.
Austin Friars House
2-6 Austin Friars
London EC2N 2HD

Tel: 020 7628 1287     Fax: 020 7628 1678
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