The FSA recently published consultation paper 193 on the proposed rules for PI insurance. It does seem at times that the FSA is capable of issuing a greater number of documents than we can reasonably expect the England cricket team to score in an innings.
When you think that it is less than two years since N2 – the date that the FSA took over as super-regulator of financial services – it is a phenomenal number of consultation papers. Is it any wonder that the whole industry is suffering from consultation fatigue?
It gets worse, of course, when you add in the consultation processes of the Treasury, Department for Work and Pensions and other bodies. Regulation by consultation seems to be the method of the day. On the other hand, I guess we would complain if we were not consulted.
The real skill seems to be choosing which consultation papers to read and comment on. Some of the recent ones which I believe will have a significant impact on the IFA sector have looked at the structure of advice and qualifications post-depolarisation.
As much as I believe depolarisation is wrong in its intent and delivery, sadly, it will happen. Once again, the consumer will be confused and potentially badly served by pretend independent advice.
Almost before we could draw breath, the FSA then published consultation paper 194, which looks at the most appropriate qualifications for advisers and firms. This makes very interesting reading because it seems not to advance standards at all. If anything, it will add to the confusion.
As well as having to consider the requirements for training and competence as set out in the FSA handbook, we will now have to give consideration to the Skills Council for Financial Services, part of the Department for Skills and Education. Never heard of it? That is not particularly surprising but you had better get used to it because it is eventually going to have a major impact on your life.
However, that major impact may be some way off. There has been a massive cop-out on the part of the FSA and Skills Council in that they are introducing a regime which requires advisers to be no better qualified than they are today. If you are FPC-qualified, you will be able to carry on as before. It will be up to your firm to determine your competency and select appropriate examination qualifications from a list provided by the Skills Council.
These examinations will be known as appropriate examinations rather than approved examinations, which is what they were known as before. You may ask yourself what is the difference between the two? The difference is responsibility. Your responsibility will be to ensure that you and your advisers are qualified to do your job as part of your commitment to the FSA's training and competence regime.
Qualifications, remember, form only a part of what makes an adviser competent. However, too often we hear the excuse that an adviser does not need higher standards of qualification.
“I have been doing this for 30 years and I know what I am doing,” is typical of such a response. This is a dinosaur approach in the extreme. The fact is that if you are not constantly updating and testing your knowledge in this business, then you are at best marginalising yourself and at worst probably giving inappropriate advice to clients.
I challenged all the non-AFPC-qualified advisers in my firm to take the new savings and investments exam from the Chartered Insurance Institute because we accepted that FPC was inadequate in these important areas. I wish that the FSA and Skills Council had taken this on board as well. By not insisting on this addition to the FPC range, both bodies have failed the public badly.
But it is not too late. CP194 is a consultation paper and there is still the chance that they can snatch a small victory from the jaws of defeat.
As unpopular as this may be with many readers, the FSA should insist that the minimum requirement should be the FPC plus the savings and investments exam. This should be achieved by the middle of 2004 and no later.
If you are serious about advising the public, you should be serious about your own education as well.
Nick Bamford is managing director of Informed Choice