Exam plans backed by law, claims FSA

26 November 2009 | By Nicole Blackmore

The FSA has told advisers that its plans to enforce higher minimum qualifications have legal support after Aifa recently threatened to take the reforms to judicial review if the regulator did not soften its stance.

Speaking at the Tax Incentivised Savings Association annual conference at Plaisterers’ Hall in London last week, FSA director of conduct policy Sheila Nicoll said it is disappointing there are “still signs of denial or misplaced wishful thinking” that the proposals will go away.
She said the FSA is confident it can legally enforce a higher minimum standards of qualification and could remove an adviser’s right to trade if they do not comply.

Nicoll said: “A word of caution for those who might think they may successfully challenge our ability to raise qualification levels. I want to reiterate that our proposals are legal.

“We have the power to change our requirements if it is in the interests of protecting consumers and we are ent- itled to remove an individual’s licence to trade if we deem them not to be competent.”

Nicoll also warned firms not to try and cash in via a closing-down sale on commission.

She said: “I want to give a very clear warning to advisers who may be looking to flout our reforms or who may seek to maximise their own profit and rewards before our rule changes take effect while not paying appropriate regard to the interests of their customers. We have heard that some firms, both providers and advisers, may see the period between now and implementation as an opportunity to build up business with trail commission to get round our proposals or to suggest products in which they receive very high remuneration but which may not be the most appropriate for the consumer.

“We will take a very dim view of such detrimental behaviour and it is our intention to do some thematic work in the lead-up to the end of 2012 to make sure consumers are not losing out.”

On alternative assessments, Nicoll said the regulator would listen to proposals but they must stand up to scrutiny.

She insisted that the retail distribution review time-scales are realistic. She said she is concerned about suggestions that the FSA might not have considered its European Union obligations when putting together its RDR proposals, asserting that the regulator kept Brussels informed throughout the process.

Responding to concerns that reforms to adviser remuneration will exclude customers who cannot or will not pay a fee for advice, Nicoll said: “That is not our intention and we have said explicitly that charges can come out of the product.”

Nicoll also revealed that the FSA will be publishing another RDR paper next month, which will include a look at potential read-across of the proposals to pure protection and group personal pensions.

 

 

 

 

 

 

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