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Advisers will need annual certificate

Retail investment advisers will need a statement of professional standing in order to give independent or restricted advice from January 2013.

In its final rules on professionalism, published last week, the FSA says the SPS will provide customers with evidence that the adviser subscribes to a code of ethics, is qualified, and has kept their knowledge up to date.

The statements will be awarded annually by FSA-approved accredited bodies, which must demonstrate they act in the public interest, further the development of the profession and carry out effective verification services.

The policy statement also confirms that investment advisers must complete at least 35 hours of continuing professional development a year, which must include at least 21 hours of structured CPD.

In a departure from the professionalism consultation paper in June, the FSA has decided that both full-time and part-time advisers will be subject to the minimum 35 hours’ CPD requirement.

The regulator originally proposed a lower number of CPD hours for those working part-time.

Acceptable forms of CPD include courses, lectures, seminars or workshops. It can also include distance and e-learning tools, such as computer-based training and web-based seminars.

Where an adviser is absent from work for a prolonged period, firms can apply to the FSA to suspend the CPD requirements.

Circumstances where this would apply include maternity, paternity or adoption leave, long-term illness or disability, caring responsibilities for a family member who has a long-term illness or disability or any other absence allowed in order for the firm meet its statutory equality and diversity duties.

The FSA will require companies to supply the regulator with data about individual advisers’ professional standards from the end of 2012.

However, firms will have to alert the FSA about competence or ethical concerns that arise with individual advisers from July this year.

FSA director of conduct policy Sheila Nicoll says: “Rebuilding trust between customer and adviser is absolutely vital for the future prosperity of the retail investment market.

“In conjunction with the adviser-charging rules announced last year, this policy statement gives advisers the certainty they need to plan ahead for the RDR, whether that involves establishing a new business model based on adviser-charging, working towards new qualifications, or filling gaps with CPD. Now is the time to prepare.”

FSA’s professionalism rules

  • Firms will need to ensure their investment advisers obtain an annual statement of professional standing to demonstrate they are subscribing to RDR qualification requirements. Advisers will need to have a statement of professional standing from January 2013 to give advice.
  • Accredited bodies will issue the statement of professional standing. Now that final rules have been published, interested parties can apply for accredited body status. The FSA will then consult on candidates and aims to publish a list of accredited bodies in the handbook in the second quarter of this year.
  • Advisers have to complete at least 35 hours of continuing professional development each year. At least 21 hours must be structured.
  • Firms will have to notify the FSA if any adviser fails below the required standard of competence or ethical behaviour from July.
  • Firms will have to supply the regulator with data about individual advisers’ professional standards from the end of 2012.

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  1. More red tape under which to bury the already over-burdened IFA sector. How about FSA personnel being required to meet corresponding standards of ethics and qualifications? Fat chance of that.

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