Will QCF level 6 become the minimum?
I’m not sure many people watching FSA duo Hector Sants and Sheila Nicoll at this week’s Treasury select committee session would be confident in predicting that QCF level 4 will remain the benchmark for IFAs over the longer term.
Responding to a question about whether the qualification benchmark is likely to increase further in the future, the pair appeared to exchange knowing smiles before Sants suggested there were no “formal plans” to increase standards further (emphasis on formal).
The session is available to watch on the Parliament website here (fast forward to 15:26:30 to view the exchange) so you can judge for yourself.
Sants goes on to repeat previous FSA assertions that the issue will be kept under review.
There are currently 2,335 chartered financial planners and the CII estimates a further 9,000 are working towards chartered status. The IFP has 905 certified financial planners, although there is a some cross-over between chartered and certified.
It would be great to hear a bit more from the FSA about the huge amount of hard work taking place among advisers training up to level 4 and the large numbers now moving on to level 6.
Hopefully, one of the lessons the FSA learns from the RDR is that it is better to work hand in hand with the sector to improve standards and that any future regulatory intervention in this area is more focused on incentives rather than sticks.
Elsewhere, it was pretty shocking to hear that neither of the pair could provide figures for how many advisers were over 60. Whatever your view on the RDR, most would agree that examinations are a particularly sensitive issue for many older advisers.
Although lots of older advisers have passed or in the process of passing the exams there are a significant number who are very unhappy with being forced to abide by the new requirements.
The majority of anger I hear about RDR qualifications comes from a specific demographic. As Labour MP George Mudie points out in the session, many older advisers who only plan to remain in the industry for a few years feel outraged at having to gain higher qualifications.
When appearing in front of a Parliamentary committee which has been heavily lobbied by large numbers of older advisers you would expect senior FSA staff to be fully aware of the numbers affected.
These figures are central to any debate about grandfathering, which Sants admitted was finely balanced, or indeed any further pragmatism from the regulator over the RDR. It is worrying they were not in the minds of Sants and Nicoll when questioned by MPs.
Sants told MPs he would be happy to hear suggestions from the committee about areas where a majority of people would ask the regulator to rethink policy.
One area I would suggest is the current cliff edge deadline of January 2013. The FSA needs to take a more reasonable approach to advisers who may not hit the deadline.
One proposal could be a lower share of regulatory fees for anyone with the required qualification by January 2013 before a further deadline in the future when QCF level 4 would become the minimum standard. The regulator should also look again at sunset clauses for older advisers looking to leave the industry in the next few years.
Throughout the passage of the RDR the FSA has been pretty reckless in its lack of concern about the number of advisers remaining in the industry. It should be looking to encourage as many advisers as possible to gain higher qualifications and to continue to look after their clients whilst being more understanding of the situation facing older advisers.
Perhaps a little pressure from the TSC could see the regulator have another think about what it is looking to achieve from the RDR.
Paul McMillan is the editor of Money Marketing- follow him on twitter here