Aifa gets tough over RDR qualifications
Share
Aifa is demanding the FSA drop mandatory RDR requirements for existing advisers to reach new qualifications and has pledged to launch a judicial review if the regulator fails to listen.
In a toughening of its stance on the RDR, Aifa director general Chris Cummings (pictured) says the FSA should be encouraging IFAs to meet higher professional standards with regulatory incentives rather than imposing an “arbitrary cliff edge”.
In an interview with this week’s Money Marketing, Cummings says advisers would want to increase qualifications if they were offered lower regulatory fees, lower capital requirements and less intrusive supervision. He says Aifa has no problem with new entrants having to reach QCF level four as long as regulatory incentives are offered.
He says: “The IFA sector has gone further than any other part of the industry in terms of improving professionalism. If there is a good commercial reason for advisers to get the qualification, then they will. What we have to avoid is an arbitrary date that leads to the closure of good firms.
“This approach is what the RDR was intended to do, that is increase consumer access to financial services. The current plans will lead to less people getting advice and that advice becoming more expensive.”
Cummings says the FSA must move away from its current “confrontational approach” when dealing with the investment market which, in itself, has been one of the biggest victims of the banking crisis. “We have already been punished once due to the failures of the banking system, to be punished again by introducing arbitrary supervision is deeply unfair,” he says.
Cummings says if the FSA does not listen on retrospective qualifications, Aifa will seek a judicial review of the RDR process. He says this would be a last resort as it would mean spending members’ money, as well as the FSA spending members’ money defending it.
Aifa is also looking at separate competition reviews to be brought to the Office of Fair Trading and European Commission on the FSA’s ability to abolish commission and its proposed ban on factoring.
“We think there is a strong challenge to their ban on provider factoring,” says Cummings.
SimplyBiz chairman Ken Davy says: “This is a very positive stance for Aifa to adopt. It recognises the whole of the IFA sector is on an unstoppable journey towards enhanced professionalism. Forcing an acceleration of this journey through an arbitrary deadline is simply the wrong way for the FSA to proceed.”
Institute of Financial Planning chief executive Nick Cann says: “We support the use of regulatory dividends but we do not believe that, under its current guise, the RDR should allow IFAs to continue without higher qualifications. Aifa’s membership needs to decide whether they want to become professional businesses offering independent advice or offer a more simplified service to their clients.”
Adviser Alliance director Alan Lakey says: “I fully support the robust stance that Aifa is taking on this issue.”
For full coverage of responses to the RDR consultation paper, see this week’s Money Marketing.
If you enjoyed this article, sign up here to receive daily email updates from Money Marketing and Follow @_moneymarketing
Readers' comments (100)
The Mystery Shopper for IFAs | 4 Nov 2009 9:39 am
Wow, I'm just picking myself off the floor!!!
Has Cummings finally woken up? After more than 10 years of corporate and illegal abuse from the F-Pack against IFAs and all falling on AIFA's deaf ears, HE HAS SEEN THE LIGHT?
Well lets not get too excited and see if he can carry this one through. Keep it up Chris and don't relent as the Leviathan monster is weakening.
Unsuitable or offensive? Report this comment
Anonymous | 4 Nov 2009 9:40 am
Can anyone countenance what would happen if accountants or solicitors where given the same deadlines, retrain by X or else?
Unsuitable or offensive? Report this comment
David | 4 Nov 2009 9:41 am
Some common sense at last - well said.
Unsuitable or offensive? Report this comment
Anonymous | 4 Nov 2009 9:41 am
There are a lot of very experienced advisers who want to improve their qualifications but at the same time don't have the benefit of unlimited time to study. The average age of an adviser is hardly something to be complacent about, and not giving time and credit for experience to comply with RDR is simply going to make matters worse. There is no great rush of young graduates to become financial advisers afterall. Or perhaps that's the intention? To make the IFA sector the preserve of the rich? Or perhaps to remove it altogether?
Unsuitable or offensive? Report this comment
Anonymous | 4 Nov 2009 9:43 am
I believe the majority of Aifa members have few qualifications and so it is understandable that Aifa must take this stance on behalf of those members. However I feel as I am sure the public at large do that advisers must have a certain level of technical klnowledge and this is mainly gained/measured through examiniation. I am sure no one would take advice from a solicitor who was not qualified whether he'd been around for 2 years or two decades!!
Unsuitable or offensive? Report this comment
Richard Penny | 4 Nov 2009 9:46 am
At last, some common sense.
Unsuitable or offensive? Report this comment
Julian Sunley | 4 Nov 2009 9:49 am
When will people just accept the RDR and get on with the exams. They should not be that difficult for any 'good' advisers out there and surely will weed out some of the chaff out there. If you are committed to being a professional in this industry then acceptance to me seems to make sense and 2012 is still 3 years away. No one can argue this has not been coming for a while so if not already on the exam hunt I would question your industry commitment. I am now working towards chartered as no doubt level 6 will become mandatory for certain areas of advice in the years to come and on the basis I have another 20 years plus to retirement I would rather be ahead of the game than having to play catchup and becoming one of the 'whingers'in the future.
Unsuitable or offensive? Report this comment
Anonymous | 4 Nov 2009 9:50 am
Can't belive I'm reading this, what's changed his mind?
Unsuitable or offensive? Report this comment
Anonymous | 4 Nov 2009 9:51 am
If all IFAs were as professional as accountants and solicitors, we wouldn't need the RDR professionalism and qualifications work. Sadly, not all IFAs are. Existing qualification levels are insufficient to give consumers confidence, and the bar needs to be raised.
Those who have sufficient desire to remain in the trade will upskill themselves. Those who don't, won't. New people, more highly qualified, will enter the industry over time in the place of those who leave.
Unsuitable or offensive? Report this comment
Colin | 4 Nov 2009 9:51 am
Bravo - at last one of our bodies is standing up to the FSA . I have the qualifications ( well in what I understand to be required ? ) but totally support the stance ,although I do agree a gradual increase in qualification requirements -new starters and specialist markets in particular-should be in place. As for the 2nd part - Aifa is also looking at separate competition reviews to be brought to the Office of Fair Trading and European Commission on the FSA’s ability to abolish commission and its proposed ban on factoring. The whole banning of commision issue which will only lead to less and less consumer acces and choice is an even bigger issue in my mind - I for one would be prepared to see my Aifa fees spent and even contribute further to take the FSA to task and win the case on this one.
Unsuitable or offensive? Report this comment