The LIA was impressed by the proposal from the FSA in CP 34 and subsequent releases on training and competence that the industry should take greater responsibility for training and competence of financial advisers.
Instead of 50 hours of CPD, the FSA is saying that individual firms will be required to put in place arrangements to suit their circumstances.
The LIA is also impressed by the need for the public to have “a badge they can trust”. What we need for public consumption is a simple description linked to measurable service standards.
The ABI, in launching the Raising Standards initiative, has gone down the route of measurable standards and it makes sense to develop a quality mark for the intermediary in parallel. The LIA has put together a scheme which proposes two new titles – for the IFA, Accredited Independent Financial Adviser, and for a tied adviser, Accredited Financial Adviser. These titles will only be gained and retained by passing an annual test of knowledge and achieving a compliance sign-off on criteria.
We are putting in place a process of updating core-competence information on regulation, the economy, tax, protection, investment, pensions, mortgages, suitability of financial advice and other matters. There will be a quarterly news-letter and self-test questions on CD-Rom or paper.
The annual test of knowledge will be undertaken online at a work site or test centre using a randomised question bank. The test will be standard four-part multiple choice. In addition, there will be a compliance certificate. This will come from the compliance officer, supervisor or head of firm and will confirm compliant work process and output as well as absence of serious complaints.
There have been suggestions that the LIA is fragmenting the marketplace but we envisage all advisers, both IFA and tied, benefiting from this scheme as both LIA members and non-LIA members will be welcome to take part.
It has been suggested that we are trying to steal a march on so-called rival bodies such as Sofa and the IFP. We do not regard Sofa and the IFP as rivals. In fact, we work with them where there seems to be common ground. We plan to share with them the results of our development work and invite them to take part at very little cost. The only issue is whether those who take part should share in some way in the developmental costs. But these will be recouped once the scheme is running.
An issue has arisen about the fact that two titles have been put forward. We originally suggested one and it was only after suggestions were made that we should differentiate the IFA from tied advisers that we conceded including the word independent. The fact that the initials seem to be close to the name of a trade body is neither here nor there, bearing in mind that we are not going to allow accredited financial advisers to use initials. The trademark will contain the full title and those who choose to infringe this will find that we shall take action to make them stop.
The advisory panel will have a good cross-section of industry representatives and there will be a parallel consumer focus group to give advice on client needs.
We envisage a consultation stage which will put the finishing touches to the scheme.
It is a step that the industry should take to go beyond the poor-quality CPD, which has caused some firms to get into trouble with their regulator, a step beyond the compulsory examinations and, above all, a step in developing confidence on the part of the public in the financial adviser profession.
John Ellis is director of public affairs at the LIA