This has been a week of discovery in relation to the Professionalism element of the Retail Distribution Review, but the resignation of the FSA’s Chief Executive, Hector Sants, has grabbed the headlines, and perhaps raised peoples’ hopes that the Retail Distribution Review Professional Standards deadline could be extended.
We think not. The departure of Sants at such a critical moment has created a degree of excitement, and to a certain extent refuelled speculation that after 5th May, a new Government will sweep away the FSA. But all, apart from the most stubborn reactionaries, now accept that there will always be a need to supervise the financial services sector and what David Cameron’s Tory party are really proposing is a reallocation of activities between an all-powerful Regulator and the Bank of England.
So the upshot is, that in Retail Distribution Review terms, its business as usual.
Everyone Will Need to Top Up
The Skills Council (FSSC) is pressing on with its latest round of interactive briefings, from which the most important message has been that the new standards will more than likely require every investment adviser to undertake approved, structured (validated) CPD to bridge the gap between the current Level 4 qualifications and the new ApEx standards.
In addition at this month’s FSSC briefing, Sarah Thwaites, Director of Skills Development commented that even investment advisers holding a Level 6 qualification in Financial Services would be subject to structured ‘top up’ activities. This firmly underlines the objective of the Retail Distribution Review Professionalism initiative to change the emphasis from attainment of a professional qualification to evidencing that all of the identified benchmark technical knowledge is maintained to the prescribed standard.
The logic for this is self-evident.
There is relatively limited value to the industry in having investment advisers available to consumers who at one point in time passed a series of demanding Diploma or Advanced Diploma written examinations. Increasingly sophisticated and informed consumers seek more than this.
In itself a one-time pass of a technical exam merely indicates that at a moment in history, an investment adviser proved to an awarding examiner that he could pick up 55% of the available marks when examined. Unkindly, some critics view this as the investment adviser being no greater than 45% ignorant about the technical knowledge which he practices on a daily basis.
So, the emphasis from end of 2012 is on investment advisers having a higher, consistent standard of technical knowledge, being able to evidence this, and be able to show the Regulator that they can apply this knowledge – week in, week out.
Objectively, one can barely imagine the repair of the root cause of insufficient consumer confidence and trust in investment advice, without individuals, Firms and the Regulator being able to demonstrate that higher and consistent advice standards prevail.
Later this month, we’ll look at the CPD proposals in more detail, and in March, we’ll discuss the key changes in subject content and the shift in requirement to a competence model which is based on combining and applying the core technical knowledge. In addition I’ll also look at the outcome standards for financial planners advising on Packaged Products.
Mark Ehlinger - 11th February 2010