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CPD: Financial services regulation and ethics

The latest edition of Newsbrief counts as 1 hour of structured CPD and covers the regulatory and marketplace changes which took place during January 2014. Visit the Money Marketing CPD Centre to answer 10 multiple choice questions and complete this CPD activity. Just click into your CPD Plan and you’ll find each month’s marketplace changes round-up in your activity list.

February 2014 CPD Newsbrief – Financial services regulation and ethics


CII consultation on chartered status

Fay Goddard

The CII is currently consulting on the criteria needed for firms to attain the corporate chartered title. The growth of chartered financial planning firms since the title was introduced has been impressive – but will the proposed changes, if implemented, deter firms from setting their sights on this prestigious title?

The Corporate Chartered Title (CCT) for financial planning firms was granted in April 2007 and there are now 550 firms holding the title. The CII has decided that it is time to review the criteria required to gain the title and the proposals, which the CII emphasises are ‘only possibilities’ would make it tougher for firms.

One of the difficulties currently facing the CII is determining whether a specialist division within a larger financial institution such as an accountancy practice or franchise operation is eligible. The proposals move from a discretionary decision on what is termed the ‘highest management team’ to firms with an ‘appropriate management team,’ defined as having its ‘own trading identity’ and being ‘responsible for their own profit and loss account’. Another proposal put forward would require chartered individuals to play a more prominent role in the advice process by demonstrating one or more of the following:

  1. At least 50% of those providing advice are chartered.
  2. A chartered individual triages all new customers.
  3. A chartered individual signs off all advice before it is issued.

Any one of these could mean a major change in processes for many existing chartered firms, although the CII is also seeking views on timescales for introducing or transitioning any new requirements.

A further proposal is the tightening up of firms’ policies and reviews in areas including service standards, customer satisfaction, supplier relationships and quality control.

In summary, the proposals raise the bar with increased focus on conduct and culture, aligning with the CII’s public interest requirement as a chartered body.


Consumer credit regulation in 2014

Charlotte Mannouris

On 1 April 2014, the Financial Conduct Authority (FCA) takes over from the Office of Fair Trading (OFT) to become the regulator for the consumer credit industry.

The FCA will regulate hire purchase, credit card issuers, payday loan companies, pawnbrokers, debt management and collection firms, and providers of debt advice. Consumer credit firms will have to follow a similar authorisation process to other financial firms. They will also have to comply with certain standards of conduct, which will hinge largely on the level of risk that their products and practices pose to consumers.

The FCA’s supervision model, which is described as ‘consumer-centric,’ will apply to consumer credit in the same way as it applies to other regulated financial firms. Higher risk firms that have a significant impact on the market will have a dedicated supervisor, and will be expected to provide the regulator with a wide range of information about their business on a regular basis. For lower-risk firms the supervisory regime will be less onerous.

As the prudential regulator of smaller financial firms, the FCA will also ensure that they are managing the risks in their business sensibly and effectively so that, if problems arise, consumers will not be unfairly harmed.

One area that the FCA sees as a priority is the provision of payday loans, which it terms ‘high-risk short-term loans.’ There is evidence of a range of problems that the FCA is expected to address, such as how firms assess whether a consumer can afford to pay back a loan before lending to them, and the practice of providing ‘rollover loans,’ where money is advanced repeatedly without an assessment of the consumer’s individual circumstances.

At its heart, the regulation of consumer credit will be an exercise in educating previously unregulated businesses in what it means to ‘treat customers fairly.’


Will writers get code of ethics

Samuel Dale

The Society of Trust and Estate Practitioners (STEP) has launched a code for will preparation in England and Wales, to take effect from 1 April.

The ethical code will apply to all STEP members who prepare wills, and provides clients with a list of considerations that a will drafter must consider when preparing a will.

The Government has rejected calls to regulate will writing despite the Legal Services Board claiming lives are being “seriously damaged” without regulation.

Under the code, practitioners are expected to demonstrate openness and transparency, integrity and competency in managing clients’ affairs.

The range of standards that practitioners must adhere to under the code include avoiding conflicts of interest, clearly explaining cost implications to clients and managing clients’ private information appropriately.

STEP is the worldwide professional association for practitioners dealing with family inheritance and succession planning.

The latest edition of Newsbrief counts as 1 hour of structured CPD and covers the regulatory and marketplace changes which took place during January 2014. Visit the Money Marketing CPD Centre to answer 10 multiple choice questions and complete this CPD activity.

Just click into your CPD Plan and you’ll find each month’s marketplace changes round-up in your activity list.

Not yet registered? Join for free today at and access over 35 hours of independent, accredited CPD learning content. 

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