As we approach the end of the year, all eyes will be on the number of advisers that have met the required professional standard and are therefore able to continue advising on retail investments in 2013.
There has been some confusion about the rules relating to statements of professional standing so I will take this opportunity to clarify.
All retail investment advisers must hold an appropriate level 4 qualification, completed and had verified any required gap fill and either hold, or have applied for, an SPS by 31 December. If these criteria are not met, the firm must de-authorise the adviser.
As long as an adviser has applied for an SPS, there is a 60 day window to allow the relevant accredited body time to issue the SPS. The FSA provided this ruling in anticipation of a last minute rush of SPS applications and to allow for any processing delays due to capacity issues.
It is not an extension of time for advisers to meet the requirements, as some have believed.
Whilst all the focus still appears to be on qualifications, I would like to mention the other components of professional standards, namely maintaining competence through ongoing CPD and ethics.
The FSA has, as I am sure you know, appointed a number of organisations, including the CII, as acredited bodies. Their role is to oversee individual advisers’ CPD activity and ensure that they subscribe to a code of ethics that is consistent with the FSA’s Statements of Principle for Approved Persons.
But what in practice does this mean for an AB? Checking CPD records is relatively straightforward, as is asking someone to confirm that they have adhered to a code of ethics. I do question though, whether this self declaration is sufficient.
So what can we do to emphasise the importance of behaviour by both individuals and firms? First, the role of an AB is not to proactively seek out unethical practices but they do have a responsibility to deal with breaches, where these become evident. I also think that professional bodies, whether FSA accredited or not, should support members with guidance on ethical best practice and the PFS will be providing members with a very comprehensive toolkit in the New Year.
Dealing with ethical dilemmas is not new to the CII. It has an established independent Professional Standards Board and a disciplinary and appeals process set up to uphold the standards and reputation of the insurance and financial advisory professions. Any investigation that results in disciplinary action against a member is publicised and we believe others should follow this example.
Going forward, in its capacity as an AB, the CII will have a duty to report any serious breaches of its code of ethics to both the firm through which an adviser is authorised and the regulator, a role that we will undertake with diligence and integrity.
Being better qualified is not enough alone to build greater trust and confidence in our profession. All of us, advisers, firms and ABs must recognise the importance of ethical behaviour and act where necessary to protect the reputation of our profession.
Fay Goddard is chief executive of the Personal Finance Society