FSA may reconsider on level 4 for simplified advice
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The FSA says it may reconsider its requirement for simplified advisers to be qualified to QCF level four, conceding that a lower qualification might be more suitable where an automated service is used.
Speaking at an Association of British Insurers’ conference today, FSA director of conduct policy Sheila Nicoll said that where simplified advice is delivered via an automated service, QCF level four may not be required.
She said: “Last year, in CP09/18, we suggested that [QCF level four] standards should apply equally to those giving simplified advice. The responses to this were divided, and we can see that there might be an argument in terms of proportionality. There is also a question of how the qualification requirements might apply in a simplified advice process that is fully automated.”
She added that the FSA are open-minded about the content of qualifications saying they would not necessarily have to cover the whole breadth of advice.
“We are waiting for proposals from the industry on this,” she said.
Nicoll said she expects the FSA’s supervision of simplified advice will be “proportionate”.
When asked whether the FSA accepts that a simplified advice process will deliver good, but not necessarily the best outcomes, Nicoll said: “I have a lot of sympathy with that view, but we have to decide what is meant by ’good’ – I have no particular objections to that statement, however.”
Also speaking at the conference, Financial Ombudsman Service lead ombudsman Caroline Mitchell said she agreed that a good outcome is better than no advice at all.
She said: “I agree that something is better than nothing as long as people understand what the service is that they are getting. We don’t want to be seen as an obstacle and we want to engage in this process. It is about looking at what is fair and reasonable in a proportionate sense.”
Nicoll urged the industry to take the lead on developing a simplified advice process.
She said: “Regulators do not have a good track record on developing processes and products in this sphere.”
When asked if the FSA wants to see a generic simplified advice model across the industry she said the FSA would not look to impose one.
She said: “We have got to recognise and be sensitive to the fact that there are many different business models and we are not going to impose a generic model on anyone.”
In its RDR policy statement in March, the FSA said it remained concerned about allowing lower qualification standards for simplified advice but was working with the industry to explore a streamlined qualification.
The policy statement outlined how the majority of IFA respondents and the Financial Services Consumer Panel support the same professional standards for simplified and full advice with IFAs concerned that lower qualifications for simplified advice would give bancassurers a competitive advantage and lead to consumer detriment. The majority of bancassurers and providers are against QCF Level four for simplified advice as they believe the training costs would not make the model viable.
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Readers' comments (21)
Anonymous | 18 May 2010 2:21 pm
Funny, I don't think that level 4's costs would be viable for me to implement but that won't matter to Sheila Nicoll, because I'm not a bank.
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terry | 18 May 2010 2:37 pm
Talk about confused, I have totally lost the plot. It seems the FSA have also lost it. The insisted that there was not going to be any dumbing down, but no doubt there have been some interesting meetings with the banks over expensive dinners.
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Anonymous | 18 May 2010 2:39 pm
As usual, what a waste of time and the sill y person is being paid to attend and talk at this conference
A fully automated system is provided by the banks, Tesco's of this world they are exempt under RDR, so they don't need Level 4
maybe there is a training need here !!!!!!!!!!!!!!!!!!!!!!!!
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Tim Kelsey | 18 May 2010 2:40 pm
"The majority of bancassurers and providers are against QCF Level four for simplified advice as they believe the training costs would not make the model viable."
Why do i feel this should read:
""The majority of bancassurers and providers are against QCF Level four for simplified advice as they believe they can hide behind poorly trained staff when the mis-selling scandals start, when consumers looking for cheap advice are thrust into the arms of the banks."
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Andy Green | 18 May 2010 2:44 pm
We should all have the Diploma if we are going to give advice. It isn't expensive or hard and doesn' take much time if you're any good.
Those who struggle with the exams should not give anyone advice.....
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Exasperated me | 18 May 2010 2:45 pm
The FSA knows full well that imposing higher qualifications for existing advisers is illegal.
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Barry | 18 May 2010 2:50 pm
Just a silly thought, or just maybe it is not silly
Can someone please exlain to me how an automated system (a website) site an exam???? yes ok someone has to programme it that I know but that is an IT nerd, I have it the compliance officer at the bank has to have the level 4, O no he doe's not as he is exempt he works for a bank
Back to square one, OK let's have another costly consoltation, the IFA's will pay for it
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Anonymous | 18 May 2010 2:51 pm
Crickey, the FSA is willing to listen? and doesn't want to be seen as an obstacle or was it "seen as being obstinate"? It wants to be seen as fair and reasonable? is this sensible approach universal or only for the banks?
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David Laffar | 18 May 2010 2:56 pm
automated good advice will be OK and an acceptable substitute for Best advice after 2012 and after loads of financial advisers who for many years have always given Best advice have been removed from the Best advice market place by the Educated Idiots who will remain in their highly paid positions and continue to tell everyone how clever they are.
It,s gonna be great aint it.
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Crazy gang IFA member | 18 May 2010 3:02 pm
to Andy - it isn't expensive?! or hard? If your any good? How patronising. You seem to be quite an arrogant person to believe all this clap trap over confidence and attitude got us into all this mess in the first place. Giving advise isn't just about exams it is about forming a long term relationship with clients and also listening to them about things that sometimes are not even financially related. Not very profitable Iknow Andy but something that seems to be lacking these days.
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