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Independent view

A recent Treasury discussion document asked for views on the subject of Catmarking of advice. You may have read the document. Assuming you had the time and inclination, you may have even responded to the document.

Of course, many potential respondents may have doubted the point of making a response. After all, responses to such discussion documents are ignored by the Government, aren&#39t they?

Regardless, it is probably the case that most IFAs would be somewhat taken aback by the suggestion that advice needs to be Catmarked. A reasonable question might be to ask why, after more than a dozen years of regulation of advice, we have failed to reach a level where advice is already not satisfactory? Can it really be the case that regulation of financial services has failed so miserably?

Advisers have not only been subject to stringent regulation for a long time but have also been required to achieve a minimum standard of competence proven by qualifications. The minimum required standard is the Financial Planning Certificate but it appears there is now a widely held view that there is a need to raise this minimum standard.

I wonder how long it will be before that minimum standard reaches the Advanced Financial Planning Certificate – a level most commentators would agree is significantly higher?

I am, however, concerned that in recent months criticism has been levelled at advisers who have only achieved the minimum FPC standard. It will always be the case that, in a highly regulated environment and in a business world which is highly demanding, the majority of people will achieve the minimum required standard and no more.

It is for this reason that I was delighted last December to be elected to the board of the Sofa. I am an advocate of improved educational standards for advisers in the financial services profession. The role of Sofa is to encourage people towards higher educational standards and not to criticise those who have achieved the minimum level. Indeed, the vast majority of those associated with Sofa are FPC holders who are seeking to raise their own standards.

I have no doubt we will be seeing consultation documents from the FSA on the subject of minimum standards of qualification. I would urge all IFAs to respond to such discussion documents otherwise we run the real risk of not having our voice heard.

The FPC may well have been the desired standard when it was set as the minimum but, in an increasingly more complex financial world, we do need to raise our sights. The AFPC for most of us is not a simple examination. In fact, for all but the smartest of candidates, most of us take in excess of two years to study to the required standard.

Any professional qualification which requires the dedication and commitment to the hours of study required by the AFPC must constitute a reasonably high level of quality.

No doubt there will be those few individuals who consider even the AFPC to be inadequate but I think the majority of informed opinion will be that it is satisfactory. However, we must encourage people to attain higher standards and not criticise them for achieving the minimum required. We must be able to demonstrate to advisers the benefit to them, their business and their clients of the advantage of higher standards of education and qualification.

Sofa has recently launched two half-paper AFPC qualifications, K10 and K20, looking at some of the more complex aspects of pensions and investments for those clients reaching retirement. These papers are designed to encourage FPC holders to improve their qualification levels.

A great deal of activity in the IFA sector revolves around those clients at or reaching retirement and it is important that the quality of advice provided for such clients is high. Attainment of a qualification such as K10 and K20 in isolation does not prove quality of advice. What is does prove is that the adviser at least has a good understanding of the subject.

Advisers have two choices – we can wait passively for the regulators to impose a new standard of education upon us or we can be more proactive and strive now to push back the qualification barriers for ourselves.


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