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CISI chief on kicking out qualification frauds

Money Marketing sits down with Chartered Institute for Securities and Investment boss Simon Culhane to discuss making an adviser register work, the future of pension transfer exams, and whether more professional body mergers could be on the cards.

Are you still concerned about false qualifications appearing on adviser directories? What steps are you taking to minimise the problem?

Yes, we are concerned. Our financial planning team check Unbiased monthly and write to those misusing the CFP marks. We have confirmed on the record that if we hear of any advisers falsely claiming to hold the certified planner designation, or any of our designations, we will investigate immediately.

If we discover that the adviser is fraudulently misrepresenting themselves, we will take disciplinary or legal action against that individual and this could result in them losing their membership of the CISI.

Do you think the FCA’s “find an adviser” addition to its register is a positive development? What else needs to appear on the FCA listings to ensure customers get pointed to good advisers?

We believe it should be made easier for consumers to differentiate between individuals who have made a personal commitment to higher standards and those that haven’t.

We are concerned that the FCA will fall short of its laudable goal of “empowering the consumer” by failing to include key and relevant information about an individual, such as the person’s membership and standing within their professional body and whether they possess a valid Statement of Professional Standing.

It is both surprising and disappointing that it is not, currently, proposing for the directory to carry any information about an individual’s standing within their professional body, nor whether the individual holds an SPS and dates of its validity. These are two serious omissions.

Being awarded membership of a chartered professional body is a major achievement that signifies the individual has high levels of knowledge, skills and integrity, and clearly differentiates them from those who are not members. Similarly, it is a requirement for retail financial advisers to hold an SPS. Therefore, when the public are choosing an adviser, these are important factors.

We agree with the FCA that the primary focus of the directory should be on providing significant relevant information, in a format that can be easily understood, for the average search by a member of the public, who may be uninformed in the finer distinctions of different types of activity and regulation within retail financial services.

Details about professional body membership, and whether the individual is an SPS holder, are materially relevant information.

We recently surveyed our member firms on the information they felt it was important to carry on the register, and 90 per cent said information about whether individuals held an SPS and their professional body membership should be included in any proposed directory.

Are you still critical of the FCA’s approach to inducements in light of its comments that services such as free transfer value analysis, as well as education, training courses and white labelling offered by platforms, could fall foul of the rules?

Now that the rules are a little better understood, we work together with providers and supporters of the CISI to ensure they get maximum benefit from their relationships with us.

For example, attending our annual financial planning conference earlier this month enabled our corporate supporters to demonstrate their effectiveness to our planners, but did not fall foul of the new regulations because they did not pay for particular parts of the event, such as the gala dinner. So there are ways in which we can still work together to support the financial planning community.

Is there a case for any more professional (or trade) body mergers in the future, as the lines across traditional markets like financial planning and investment continue to blur?

There may be a case for future mergers but if you look at other professions and industries, monopolies rarely, if ever, work for the good of the consumer. Professional bodies exist to improve professional standards and behaviour, as well as playing their part to educate the consumer. Healthy competition is good.

What are your thoughts on the qualifications framework for defined benefit transfers after the FCA’s recent policy statement?

We broadly welcome the policy statement and agree that all advisers dealing with a client’s pension transfer should have sufficient pensions and investment knowledge to make a fully informed decision. We agree with the FCA that it may not be necessary for all advisers to sit and pass additional exams, but that all should need to demonstrate they have sufficient depth of technical knowledge, both on pensions and investments.

The statement makes it clear that the advisers were always on the hook for the liability for advice telling a client not to transfer out of a DB scheme. This has not changed and quite rightly so.

We expect there will be fewer complaints made, as advisers will send a full report to the client, stating the reasons and mitigating factors for the client not to transfer their pension benefits.

This will be an important historic record for both parties. It will also help clients understand the complex areas and factors involved in making a decision to transfer, many of which clients do not fully understand.

The issue might come where the advice not to transfer is given with limited information. Here is the area that might be open to dispute.

It might be obvious to advisers in some cases that the recommendation should be not to transfer, but the paperwork and reports should be clear where this decision is made on limited information.

While it might realistically be unlikely that a different decision would be made with more facts, it does leave the door open to a future challenge from clients.

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