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IFAs at the junction

What is the central focus of the discussion paper on exams?

We are trying to send a very strong message to the industry that competence is a fundamental basis for good regulation, good compliance. It is quite an important step on the long road to professionalism. It is almost decision time – do we want to be committed to professionalism in a serious long-term way or not? What we are trying to do in the review is come up with a view of what professionalism will look like. It is a chance for a serious debate about what constitutes being a professional.

You talk about the road to professionalism. How far down that road are IFAs at the moment?

I think they are at a junction. It is a combination of a number of things that bring this to a head, first of all, the examination review, second of all, Sandler – who I have been briefing along the way – and third, polarisation. Those three things together form the junction. Where we are exactly on the road I would not like to say. Somewhere in the middle I would guess.

Do consumers view the IFA sector as professionals at the moment?

I do not think they do. There may be certain types of adviser that have achieved that status but most have not.

For example?

The Imro upmarket fee-based IFAs are a group which is leading the way. I also appreciate there are different types of advice. Professionalism for me does not equate to a kind of exclusive guild-type system. I find the word “professional” has good and bad connotations.

In Ron Sandler&#39s July consultation paper he observed IFAs do not have sufficient levels of investment knowledge. Do you agree with this comment?

It is not a view, it is a fact. There is not an irretrievable problem here but something we want to address is if it could be more structured in CPD. The proposal in the paper is to discuss the introduction of a system where every two years IFAs would need to show that they have kept up to speed with those things that have changed or possibly those areas of business they have brought into their portfolio.

The way I see it, every year or two advisers would be required to do what would probably be called a top-up, an assessment, which could be online. It would require IFAs to demonstrate they are up to speed on things that have changed. That is one model. On top of that, or alternatively, there could be some sort of specialist module which would apply to everyone across the industry if some new development were to come along.

What kind of timescale for implementation are you thinking about?

We could be looking at having a solution by the end of next year followed by a period to introduce the new system.

The average age of IFAs is 55. Do you foresee any reluctance amongst IFAs to embrace these proposals?

The new exams would apply to new entrants. We are not seeking to ask people with more experience in the industry to retake exams, although the re-testing proposal would affect people in the industry. We see this as being a very useful training tool for firms.

We have taken comments about recruitment seriously and there is a section in the paper about a bridging qualification which is about trying to build a step into the profession from formal education. It could be taken in schools, universities and colleges and allow people to get a grounding in financial services.

What changes are in store for designatory letters?

We are proposing one des- ignation for the industry. Giving people the chance to put in brackets after their name what they specialise in is an option. I do not really want to get into sub-specialisation – that is where the problems start. One of the questions is, do we need anything more than just to say “FSA authorised”?

The LIA has come up with a suggestion which is on the table and others might want to come up with suggestions as well. The whole point of the paper is to set out a framework for discussion on this issues. It is an open invitation to come forward with ideas before the end of February.

What do you think about the LIA proposal?

The proposal fits in well with this but it is obviously one of a number that might be put forward. The LIA happens to have put its views forward first.

The FSA has made positive comments about the ABI&#39s Raising Standards initiative in the past. Could the same thing happen here – instead of having an FSA-imposed solution, have an industry-led one?

We would welcome that. It is difficult to receive the support and commitment of the industry. I would rather it be an industry-led solution. I see our role as looking at a series of proposals and generating debate. The question I want to address is how do we best represent it to the public – and indeed to other parts of the industry and overseas, to try and make it a shared structure not just a UK structure.


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