IFAs and Professionalism
For several years, there has been debate about what it means to be a ‘professional’ as an independent financial adviser.
We have long held the view that it is the combination of relevant professional qualifications, relevant experience and a good standard of ethical behaviour.
With a radical shake-up for all financial advisers, in the form of the Retail Distribution Review (RDR), now only a couple of years away, the Financial Services Authority has now clarified what it will take for advisers to remain in this profession after 2012.
In their consultation paper (CP10/14: Delivering the RDR: Professionalism, including its applicability to pure protection advice, with feedback to CP09/18 and CP09/31), the FSA has described the steps that individual advisers will need to take.
Your financial adviser will be required to hold a statement of personal standing. This is independent verification that they are meeting the new professional standards being introduced.
It will be renewed annually and will be issued by professional bodies, such as the Chartered Insurance Institute (CII) or Institute of Financial Planning (IFP), although membership of one of these bodies will not become mandatory.
There will also be a requirement, from the start of 2013, for all financial advisers to complete 35 hours a year of Continuing Professional Development (CPD) to retain their statement of personal standing. This work will include at least 21 hours of structured learning each year.
The consultation paper contains plans to include on the FSA Register a list of qualifications being held by individual advisers, with links to their relevant professional bodies.
Here at Informed Choice, we are broadly supportive of the moves being proposed in this consultation paper. The retail financial services sector needs this new set of rules to demonstrate to consumers that we are professional advisers working to high standards in the best interests of our clients.
We recognise that some advisers are going to struggle to meet the new higher standards, even though they have had several years to obtain relevant qualifications. However, the end result should be a more professional looking sector where consumers of financial services and products can have a high degree of confidence in the advice they are receiving from individual advisers.