Professional standards for investment advisers
Today saw the publication of a consultation paper on enhancing the professionalism of investment advisers under the Retail Distribution Review (RDR).
The RDR is a regulatory initiative launched several years ago, designed to address failings in the retail financial services sector, including commission bias and a low standard of professional qualifications.
The paper today proposes that the Financial Services Authority (FSA) creates a new in-house governance structure to ensure advisers achieve a greater standard of professionalism. This is needed both initially and on an ongoing basis through the achievement of new, higher level qualifications. It also means meeting enhanced standards of continuing professional development and adhering to common ethical standards.
Included within the proposals are improvements to the existing FSA Register so consumers can see which professional qualifications are held by their investment adviser and also if they are a member of any professional bodies. This will apply to both independent and restricted advisers.
Also within the paper today was a list of those professional qualifications that advisers may already hold or be studying towards, with the guarantee that should they hold one of these qualifications they will not need to take further exams once the content for meeting the new qualification standard is confirmed. Instead, advisers are able to meet any gaps through on-the-job continuing professional development.
Here at Informed Choice we fully support the need for higher professional standards within retail financial services.
We responded to the recent Retail Distribution Review consultation paper in October with constructive feedback and at the time suggested that, rather than introducing a separate Professional Standards Board, the FSA simply make membership of an existing professional body mandatory under the new regime. What is being proposed today is that where employees are members of recognised professional bodies, they will be able to use this membership to verify they have met requirements for attaining and maintaining technical competence.
As we get closer to the implementation deadline of the end of 2012, it will be interesting to see how many of our peers continue to resist the consumer centric evolution which will occur as a result of the Retail Distribution Review and how many embrace it wholeheartedly, as we have done, to change their business model into something transparent, valuable and professional.