Adviser > Your business > RDR > December 2009 Update > Raising professional standards
Raising professional standards
Find out how the FSA's proposed qualification requirements affect you.
Consultation Paper 09/31 (CP09/31) clarifies aspects of the FSA's proposals around:
- setting up a Professional Standards Board to oversee the introduction of higher qualification requirements; a Code of Ethics and a disciplinary board.
- extending the qualification requirements to existing advisers including those close to retiring.
Scottish Life's view
The qualifications issue has been the thorniest of all since the RDR journey began. We wholeheartedly support the general move to increasing minimum professional standards for advice.
We focus all our efforts on the IFA and EBC market and a move towards recognising intermediated advice as a profession is long over-due.
While it is relatively easy to accept that new entrants to the industry will have to study towards the higher qualification, concern remains over the requirement for seasoned advisers to do likewise.
However, it appears that the FSA are unlikely to move from their current position. Even a change in government appears unlikely to change matters. The 'no regrets' policy towards starting studies is very much welcomed.
Governance of professional standards
The FSA had previously floated the idea of setting up a new body to perform the governance function for professional standards.
They are now looking to existing organisations to seek formal recognition as professional bodies. The recognition awarded to these organisations would apply for a defined period and require renewal with independent audits taking place to assess each body's ongoing suitability.
Requirements for the professional bodies
- To act in the public interest so that it raises consumer confidence and trust
- To report independently on its activities in respect of its members
- To promote standards of professionalism and lead professional development in the investment advice market
- To provide help and guidance to members to meet those standards
- To monitor members' compliance with standards in an effective manner
- To have effective disciplinary measures in place for its members.
Requirements for advisers
Advisers will not be forced to join a professional body.
However, the FSA believes that firms will prefer to employ advisers who are members. Membership would effectively be a 'kite-mark' - certifying an adviser meets certain professional standards and this would be a safety net for employers.
Qualifications and transitional arrangements
Meeting the minimum qualification criteria
CP09/31 lists the professional qualifications that the FSA believe meets the QCF Level 4 minimum requirements. Note that this is a proposed list, open to consultation so more may be added and some may be removed. Some commentators have challenged the inclusion of the Member of Life Insurance Association (MLIA) for example.
Key dates
March 2010 - final qualification standards will be published. These will be the benchmark for which existing advisers need to gain further qualifications and who can "top-up" with CPD.
June 2010 - approval of the first new RDR qualifications.
October 2010 - exam material for the new qualifications become available.
January 2013 - advisers will need to have met the required qualification standard and completed CPD to continue giving advice.
Advisers holding one of the transitional qualifications will
- not be required to sit further exams.
- be required to 'top up' on any gaps between their qualifications and the required knowledge areas by undertaking Continuing Professional Development (CPD). This CPD has to be structured and evidenced (e.g. a course certificate).
Examinations
One of the more positive changes from previous RDR statements is that the FSA appear more inclined to permit work-based assessments instead of exam style assessments. These could take the form of coursework or e-learning.
However, the FSA is adamant that the technical standard of these assessments must be at least the equivalent of the exam-based standard.
How the new professional standards will affect you
To help you assess the impact of these changes, we've mapped out a simple flow chart highlighting the key changes. Please remember that this is a summary. For full details of how the proposals affect you, we recommend you read pages 29 to 37 of CP09/31.
Next page: Corporate pensions
Tell us your views
Please let us know what you think about the RDR and about our response to it.
For professional advisers only
