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Firms forced to report competence concerns

Firms will have to notify the FSA if they uncover issues with an adviser’s competence, including breaches of ethics rules.

Under a new rule proposed in the FSA’s quarterly consultation paper firms will be required not just to monitor their advisers’ behaviour but also to inform the regulator where there are issues with competence or ethics.

The rule will be introduced as part of the Training and Competence module of the FSA handbook.

Firms will have to notify the FSA where an adviser has been assessed as competent but is no longer considered to be; and where an adviser has failed to get an appropriate qualification within the time limit proposed by the FSA in its June competence and ethics paper.

Firms will also have to inform the FSA where an adviser has failed to comply with a Statement of Principle in carrying out his controlled function; and where advisers have acted outside their area of competence without supervision.

The rule will affect IFAs, tied and multi-tied investment advisers, bank advisers, stockbrokers, wealth managers, and product providers.

The FSA says it expects the rule to come into force next January and for the rule to apply to all firms employing approved persons that fall within the scope of the RDR.

It plans to issue feedback and final rules in December 2010.

In the paper the FSA says: “We already receive some ad hoc information relating to possible issues at an individual adviser level into our contact centre. Our proposals in this CP should lead to an increase in such cases and we expect to incur some costs in supervision and enforcement against this new requirement.

“This proposal has the benefits of emphasising the importance we are placing on competence and ethical behaviour of advisers, informing our supervisory activity and providing us with insights on competence and behaviour.

“This will also help us determine the type of information we need to collect in monitoring adviser behaviour after our RDR proposals are implemented at the end of 2012.”

Responses to the proposed Training and Competence rule changes should be received by the FSA by November 6.


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There are 3 comments at the moment, we would love to hear your opinion too.

  1. I wish to report my concerns about competence at the FSA. Whom do I notify?

  2. Agree with Peter

    What on earth are these people up to.

    Do they expect us to lock ourselves up and sentence ourselves as well then?

    I am really beginning to think they are all living in another world and soon we will be having a mad hatters tea party !

    Is there not a law that protects those from “self incrimination” ?

    Of course the FSA is above normal law, oh I forgot.

    What other body is above UK common law I wonder?

    With the FSA you are guilty unless you can prove your innocence, unlike UK common law where you are innocent until proven guilty and now the FSA want you to hand yourself in and lock yourself up if you think you may be guilty.

    Is this really a “fair society” Mr Cameron?

  3. Okay ~ what about breaches of ethics at Canary Wharf? Those are regularly flagged on assorted industry blogs, but the FSA conveniently ignores them, as it does the Statutory Code of Practice For Regulators.

    Is it ethical to pay £20m+ in bonuses when the FSA has been revealed to have failed monumentally to regulate the banks?

    Is it ethical for expense guidelines to be routinely breached?

    Was it ethical to pay off Clive Briault to the tune of £600K for having failed to discharge properly his professional responsibilities?

    Will it be ethical to kick out of the industry in 2013 thousands of perfectly competent and ethical advisers just because they’ve not managed to pass a load of exams, much of which have no direct bearing on what they actually do from day to day?

    Is it ethical for Hector Sants to have claimed on national TV that the FSA is entirely independent of government?

    Is it ethical for the banks to enjoy virtually no regulation whilst the FSA hammers the IFA sector into oblivion?

    Is it ethical to classify providers as intermediaries as a way of dumping the costs of their failure (often as a result of inept regulation) onto the IFA sector?

    And so the list goes on. One set of rules for us, but a completely different set for the FSA.

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