The FSA has today published proposals to strengthen its competence requirements.
The regulator says the 30-month requirement will not apply to existing advisers, deemed competent at June 30, 2009, who must be fully qualified to QCF level four by the end of 2012.
Individuals who joined the retail investment advice sector after June 30, 2009 will need to comply with the new time limit.
The FSA says the limit will start from the date that final rules are published, likely to be the end of 2010.
The paper states that if an individual is continuously absent for periods of 60 business days or more, the time can be disregarded from the 30-month limit, for example for medical reasons.
It adds that individuals who fail to meet the time limit must stop the associated regulated activity until they pass the qualification.
The FSA states: “We do not propose to apply a time limit within which an individual needs to be assessed as competent, which is more than just passing a qualification. This will remain the firm’s responsibility, based on their assessment of the risk associated with an individual continuing to operate under supervision.
“We do not expect individuals to operate under supervision indefinitely or revert to operating under supervision as a means to avoid our requirements under RDR professionalism.”
The FSA’s proposals will also remove some transitional provisions for designated investment business, which allow individuals to operate without formal qualifications, due to arrangements under their previous regulator.
The FSA says individuals relying on these provisions, introduced in 2001, will have 30 months to gain full qualifications from the time the new rules are enacted.
The FSA is also proposing to introduce a new ethical code for all sectors of the industry, not just investment advisers. It says this is likely to cost the industry £616,000 annually.
FSA director of conduct policy Sheila Nicoll says: “Competence and ethics are key elements of our regulatory regime and we have increased our scrutiny of individuals working in the financial services industry over the last few years.
“Ultimately it is in a firm’s commercial interest to recruit, train and retain good quality individuals but regulation ensures that standards of competence and ethics are maintained at an appropriate level.
“We have designed these proposals to enhance consumer protection by strengthening our competence and approved persons requirements. We want to see firms operating robust training and competence schemes and individuals demonstrating good standards of ethical behaviour.”