Mark Hoban will not have been winning many new friends in the IFA industry with his recent pronouncements on the level of adviser qualifications.
In a Parliamentary debate on the RDR last week, Hoban said: “The current minimum financial adviser qualification is at the same level as a diploma in shift management offered by McDonald’s. The products being sold by IFAs are infinitely more complex and long lasting in their effects than a Big Mac.”
Several commentators have suggested that his comments sound like they were designed to be deliberately provocative but despite the risk of my name joining Nic Cicutti’s on the list of least favourite MM columnists for some of the readership, the heart of what Hoban said is correct. The old FPC, three-part exam is a QCA level three exam, as is the basic shift manager course that McDonalds can award its staff.
In addition, the fact that it is possible, for now at least, for a new entrant to the industry to advise on complicated products, with potentially hundreds of thousands of pounds at stake with the academic equivalent of an A level is, from an objective perspective, far too low.
For an industry that is trying to establish itself on a par with accountants, lawyers or engineers as a universally recognised profession, the
basic level of qualification has to be increased.
The argument surrounding grandfathering is an entirely different matter. A lawyer, specialising in pensions, for example, may have qualified in the 60s, 70s, or 80s but this is no reason to prevent them from practicing now even though pensions legislation has changed beyond recognition since then.
Just over a year ago, Peter Hamilton QC wrote an interesting article in Money Marketing on the subject of the legal standard of competency for any job. His opinion is that in all walks of life you are expected to carry out your responsibilities to the standard of an “ordinary skilled man”.
Any increase to the minimum qualification for new entrants would automatically increase the legal standard for an ordinary skilled man and force existing practitioners to be able to demonstrate they can match this standard. Therefore, is forcing the blanket adoption of new formal exams actually necessary?
From my own experience, the exams I have taken so far, CF1 and CF2, were not a particularly difficult hurdle to clear and I would expect someone who was advising me professionally to be able to demonstrate knowledge far in excess of this general level.
From the little study I have managed so far, the RO exams for the diploma are a big step up in difficulty but by next month I hope to be able to report back with some objective evidence of one of the exams.
Gregor Watt is deputy editor at Money Marketing and is writing an exam diary of his attempts to reach QCF level 4