CII calls for FCA to consider professionalism

6 February 2012 1:10 pm | By Steve Tolley

The Chartered Insurance Institute is calling for the Financial Conduct Authority’s consumer protection objective to include a requirement for firms to demonstrate professionalism.

In a briefing note sent to MPs ahead of this afternoon’s debate on the Financial Services Bill, seen by Money Marketing, the CII calls for an amendment to the current objective so that the regulator must take account of firms’ level of professionalism when making judgments.

The current objective says firms providing regulated financial services should be expected to provide a “level of care that is appropriate”, while taking into account the risk involved in the investment or transaction, as well as the capabilities of the consumer.

The CII wants the bill to require firms to provide a “level of care and professionalism that is appropriate”.

The CII says: “In our view, supervisors must take account of levels of professionalism when making judgements about firms. Research has shown that a firm’s relative level of professionalism - by which we mean a commitment to qualifications, continued learning and ethical conduct - can help determine customer outcomes and underpin honest and fair behaviour.”

In December, the joint committee on the draft financial services bill called for a requirement for firms to take some responsibility for consumer protection.

The committee’s final report says: “To complement the principle of ‘caveat emptor’, enshrined in the draft bill, a statutory duty should be placed on firms to treat their customers ’honestly, fairly and professionally’, and the FCA should ensure that companies address conflicts of interest and provide intelligible information, rather than accurate but impenetrable information that leaves customers confused.”

The CII’s paper says: “Unfortunately the Government did not take on board the joint committee’s recommendation in its entirety. Instead firms will be ’expected’ to provide an ’appropriate level of care’ as well as advice and information that is ’timely, accurate and fit for purpose’.

“These expectations are of course perfectly reasonable, however they are focused on outcomes of an advice process and not the behavioural forces driving the decisions made by firms and their practitioners beforehand.”

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Readers' comments (14)

  • Steve | 6 Feb 2012 2:21 pm

    Erm...TCF..'cough!'

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  • Chippy Minton | 6 Feb 2012 3:14 pm

    Watch out for those vested interests there.

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  • Old Dog | 6 Feb 2012 3:17 pm

    Typical; guff by the CII.
    If they had anyone in their ranks who had any legal knowledge, they would know that the consumer is already protected in statute under the Sale of Goods and Services Act.

    Anyone at the CII who reads this should look it up.

    Also, in common law under the law of tort.

    Also COBS pretty much covers it off.

    Maybe you jokers want us to line up and have it tatooed on our foreheads too.

    Really, they are such a waste of space, these CII policymakers

    What a bunch of nincompoops.

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  • TartanTerror | 6 Feb 2012 3:29 pm

    Another drive by CII to secure long term revenue stream! Nothing else.

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  • Rich | 6 Feb 2012 3:34 pm

    Whilst the CII will have lots of new members who need gapfill and then SPS i can see that there exam revenue will fall next year. What better way to try and increase revenue again than with these sorts of ideas.

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  • Anonymous | 6 Feb 2012 3:49 pm

    RDR has been accepted as less than successful at best and an unforgivable waste of money at worst. This has however been implemented in most firms and I do not get what the CII are asking for.
    Obviously there may be a self interest in enforcing yet more exams. I personally have found little gained by taking additional exams as CPD and previous study has already embedded what I need to know. With such low scores required to pass it is proved to be an expensive exam for exams sake.

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  • D Haggerty | 6 Feb 2012 4:13 pm

    I looked at the headline and thought, well that would be a good idea. Make it compulsory for the people at the FCA regulating the Insurance industry to take CII exams and CPD to prove they were professionally qualified in the subject matter of the industry. Not unreasonable.

    Also for the nay sayers contributing so far, if the the CII and Insurance qualifications had the weight and were compulsory before anyone including bank advisers could flog insurance, the industry might not be suffering from such draconian regulation as it is today.

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  • Mark H (Not Hoban!) | 6 Feb 2012 4:21 pm

    Mmmmmm ......... self interest at its highest eh!
    So and individual can only prove his/her professionalism by examination. Well, you could knock me down with a feather CII. Remind me again, what is your business?

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  • Bill Wells | 6 Feb 2012 5:39 pm

    So, if the CII has anything to do with it we'll all soon need Chartered status before being allowed to sell a bit of term assurance. When all advisers are chartered they'll be required to gain Doctorates.

    As for saying that the "FCA should ensure that companies (need to) address conflicts of interest and provide intelligible information, rather than accurate but impenetrable information that leaves customers confused”, it is the FSA that has demanded 30 page reports to sell an ISA, not IFAs.

    If the CII, FSA, FSCS, FOS, ICO and another 50 quangos which leech the life blood out of financial services were all to close shop tomorrow, the consumer would soon be better off as the reduction in levies and wasted time complying with the edicts of this regulatory monster, started to filter through in the shape of lower product charges and reduced customer fees.

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  • Glen McKeown | 6 Feb 2012 8:51 pm

    For once I actually applaud the CII for making this statement, which is one that I have made for many years. I know of a number of brokerages that will sail through RDR, and I wouldn't class them as professional at all. Its not actually necessary to have qualifications to be professional.
    What the bureaucrats at Canary Wharf have done is create a fog of fantasy ideas. A period with an accountancy firm taught me what being professional was, and it is nothing like the melange of misinterpretation emanating from the FSA.
    And it is nothing like the hodgepodge emanating from the CII. How they ever stumbled across the concept is beyond me.
    If we got rid of all the other mess and treated clients professionally the whole adviser market would improve immeasurably, and at very little cost. The trouble is, we are still left with the Providers, and that I fear is a hope too far.

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  • Anonymous | 7 Feb 2012 5:31 am

    Since inception of a restriction by FSA to stop the attachment of a valuable option to my client’s contracts and having taken the time to study and pass relevant examination cover the principle. Added to latter the FSA policy relating to TCF, I raised the subject with my examining body. Edited copy of reply received from my examiners below?


    “Thanks for your enquiry, and I can confirm that we are not directly involved in decisions taken by the FSA with regard to regulation of mortgages and investments.

    I do of course see your point about convertible term being a useful option for the public and that restriction of options can work to the detriment of customers.”

    In line with TCF I asked for permission to forward the above to the FSA.GOV.UK which I have not done to date, I leave the rest to your imagination and the rebranding of the FSA to FCA.

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  • Anonymous | 7 Feb 2012 11:39 am

    CII looking to make more money when the RDR bonanza is over ? I hope they will be giving back their bonuses too !

    Yet another pointless exercise. What happened to TCF ?

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  • huw | 7 Feb 2012 12:06 pm

    Awful lot of hot air with very obvious vested interests. Sadly the CII are total lightweights in comparison to proper professional bodies, a point they would do well to address. Shame they can't turn their energies to doing something useful.

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  • Stan | 9 Feb 2012 11:18 am

    Yet again the CII show they are only interested in their business. Time and time again they come up with items that only serve to increase their income. Nothing is ever done to serve the adviser profession itself.

    Just waiting on that old nutshell we are a not for profit organisation blah blah. Where does all that extra money go higher salaries bonuses and higher operating costs. They act like a cut throat business in terms of generating income only. If they were serving the adviser community they would slash costs and reduce costs of exam entry and materials.

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