From the end of next year, all financial advisers are required to hold a Statement of Professional Standing in order to give advice.
This annually renewable certificate will be issued and monitored by accredited professional bodies.
Holding a Statement of Professional Standing means that your IFA has satisfied a number of professional requirements.
Firstly, they need to have passed a series of examinations in order to obtain a QCF Level 4 professional qualification, such as the Diploma in Financial Planning.
The Financial Services Authority (FSA) is currently consulting on alternative assessments for those financial advisers who do not like sitting exams, but we expect exam passes to be the most common route for securing this professional qualification.
Secondly, advisers will need to complete a bespoke programme of Continuing Professional Development in order to fill any gaps between old and new examination standards.
This ‘gap fill’ activity will vary depending on the qualifications held by your financial adviser, with some older exams requiring more ‘gaps’ to be filled through CPD activity. Advisers who have taken exams recently are likely to have less work to do in this respect, as the examination syllabus will be more up to date.
Once this gap fill activity is completed, the IFA needs to get it ‘verified’ by their chosen accredited professional body.
This process of verification is currently taking up to 60 days, and we expect it to take even longer when there is greater demand for the service in the second half of next year.
Once verified, the adviser can finally apply for their Statement of Professional Standing. This requires that they adhere to a code of ethical standards, as well as holding the required qualifications and completing relevant CPD.
The process of applying for a Statement of Professional Standing can take up to a further 60 days. Whilst less intensive that the verification of gap fill CPD, we expect the length of time it takes to get this Statement to increase as we get closer to the 31st December 2012 deadline.
Accredited professional bodies have already started the process of verifying gap fill activity and issuing Statements of Professional Standing for those financial advisers who already meet the required standards.
The latest research from the FSA suggests that 91% of current financial advisers will manage to pass the relevant exams in order to continue advising clients from the start of 2013. Anecdotal evidence in the retail financial services sector places this percentage at a much lower figure, possible only 70-80%.
Due to the process required to obtain a Statement of Professional Standing, it would be worth asking your existing IFA what progress they have made in terms of passing relevant examinations and completing the gap filling process.
If you are planning to engage with a new independent financial adviser during the next twelve months, make sure that they already hold a Statement of Professional Standing or at least have a well progressed plan to obtain one of these in time for the end of 2012.
