Open door to professionalism

21 January 2010

January is normally a month of post-Christmas blues, long dark days and failed resolutions unless you are lucky enough to escape to the sunshine or ski slopes.

The word January comes from the Roman god Janus which is usually depicted with two faces, one looking forward and the other backward, so perhaps it should be a month for reflection and planning. But Janus was also described as being the Roman God of the doors, beginnings and endings.

Will January mark the real beginning of a new profession for those prepared to walk through the door?

Consultation paper CP09/31 published by the FSA at the end of December certainly has presented us, as a professional body, with some challenges. Until now, the retail distribution review proposals have focused on requirements for regulated firms and advisers now it is our turn.

The Personal Finance Society and Chartered Insurance Institute continue to firmly support an independent professional standards board. We believe that to gain consumer confidence, the setting and oversight of professional standards should be undertaken by those outside of the industry and regulation.

We maintain that independence would be best for the longterm interests of the advice profession and consumers but lobbying on the perceived higher cost and fear of dual regulation has swayed the argument towards the FSA controlling professional standards.

The FSA is, however, placing significant importance on the role that recognised professional bodies have to play should they wish to do so. I say this because the proposed criteria for the FSA to grant recognised professional body status will not be easily achieved.

Having adequate financial resources, systems and controls, strong governance, effective monitoring and disciplinary arrangements and providing the FSA with independent reports are just some of the requirements.

This will be a challenge for the bodies but the advantage to advisory firms is clear. The FSA is proposing that firms must obtain independent confirmation that their advisers have met the requirement for attaining and maintaining technical competence.

Where FSA has recognised a professional body and its advisers are members, the firm can rely on the membership as confirmation of meeting the requirement.

This is a huge area of responsibility that can effectively be delegated but at the same time puts the onus on the professional body to deliver to the standards.

The Personal Finance Society, as part of the Chartered Insurance Institute, is well positioned to meet these challenges as we have a long history of providing the services that the FSA is looking for. Our membership continues to grow. At the end of 2009, we had just short of 26,000 members. There will still be considerable work that needs to be done though to raise our game to the required level, so, as I said earlier, raising the bar is for all of us, not just advisers. Good luck with all the challenges and let’s make 2010 the year we walked through the door.

Fay Goddard is chief executive of the Personal Finance Society

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