Changes to continuing professional development requirements look set to have as much of an impact as the retail distribution review.
The FSA has stipulated that both full and part-time advisers will have to spend a minimum of 35 hours a year on CPD, with 21 of those hours needing to be classed as structured learning.
But there is still lack of clarity over what CPD entails and the financial services industry is asking what CPD will look like after 2012.
Most agree CPD should already be factored into IFA business models and say the RDR will simply formalise this.
Chartered Insurance Institute director of communications David Ross says members of the Personal Finance Society are already required to keep their knowledge up to date. He says: “Most advisers will already be undertaking CPD as a matter of course. If financial advice is ever going to be viewed by the public as a profession on a par with medicine or law, then CPD is a necessity.”
This is a view shared by Harvest Independent Financial Management IFA Julian Stevens but he thinks moving the CPD goalposts will only add to the RDR admin burden on advisers. He says: “Solicitors are required to keep their knowledge up to date via CPD, so it is only fair that IFAs do too but this will undoubtedly add to any administrative headaches already caused by the RDR. Thirty-five hours a year is three hours a month, which is a bit of a pain.”
SimplyBiz chairman Ken Davy feels 35 hours is as good a requirement as any. He says: “If one has to set a specific number, then 35 seems logical because it is the equivalent of a week in a year. There has been confusion previously about how much CPD is required, so it is good to have some clarity.”
One significant issue that does need clarity is the definition of what qualifies as CPD. The FSA says it is: “A greater requirement for advisers to demonstrate both initial and ongoing competence, including ethical behaviour” and says structured learning can include seminars, workshops and e-learning that demonstrably improve advisers’ skills.
But some parts of the industry have expressed concern that reading, for example, falls under unstructured CPD and counts for less.
Ross says: “There has been a fair amount of ill-informed commentary on this topic, which understandably has confused advisers. We hope that this will have dissipated by 2013.”
It is important to take maximum advantage of technology using remote learning methods and webinars, which both count as structured learning
Davy believes the issue of CPD definitions will disappear once advisers realise that structured learning is easier to undertake than more traditional learning methods.
Davy says: “It is important to take maximum advantage of technology using remote learning methods and webinars, which both count as structured learning. That is not to say that one’s own reading is not important but if the right technologies are applied, then it makes CPD less onerous.”
Stevens agrees technology will play an important role in fulfilling CPD requirements after the RDR, saying interactive presentations make the process seem “less prescriptive”.
Cost is a factor in the selection of technology as a medium for providing CPD. The virtual classrooms and webcasts offered by the CII are free of charge. Ross says: “Technology such as webcasts and other downloadable content is offered at free or minimal cost and we would expect this to continue.”
Davy thinks that because traditional seminar formats are more likely to come at a cost and also require advisers to take time away from the office, technology will become the default means of providing CPD aid.
However, the format that CPD will take is not the key issue, according to Stevens.
He says: “The question we have to ask is not how we are going to keep up to date with CPD but if this proposed requirement is based on substantive evidence from the FSA that a lot of IFAs are not doing anything like this amount of CPD.”
Davy does not think there is any evidence of IFAs skimping on their obligations. He says: “The vast majority of IFAs have kept up with CPD. That is the reality.”
According to research from the regulator, 30 per cent of advisers were not undertaking 35 hours a week – something the Personal Finance Society says was a key driver in the introduction of the RDR. Ross says: “If the IFA community had been able to argue that all advisers were maintaining their knowledge at a suitable level it might ave been possible to convince the FSA that the RDR was avoidable.”
There is no doubt that CPD will take up more of advisers’ time after the RDR.
Ross says: “If you want to be part of a trusted profession, then the public has certain expectations.”
And this is a point of view that the advisory community shares. Stevens says: “CPD is the best way to demonstrate knowledge and skills. Fifteen years ago, we were having to record a certain amount of CPD per month, so it is not a huge ask. However, when it seems that most IFAs are already doing it, you have to ask why the FSA is forcing the issue.”