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Level pegging

No other aspect of the RDR has been provoking as much debate in the industry as the proposals to increase the minimum level of qualification by the end of 2012. Many advisers are already taking action to respond to the challenge but our research shows that nearly one-third of advisers say that qualifications are their primary RDR concern.

This is not only an issue for advisers, it is one that concerns the entire industry. The reputation of the financial services industry would benefit substantially from public recognition of a single consistent standard of qualification at a level customers respect. QCF Level 4 equates broadly to the first year of an undergraduate degree and while this may still be lower than some customers expect, it closes the gap significantly.

Our research shows that 57 per cent of advisers are currently studying for additional qualifications in response to the RDR proposals. However, the FSA has stated that the required standards will not be agreed until the end of the 2009 and that the fit with the current range of qualifications will not be clarified until mid-2010.

This presents the danger that some advisers may continue to delay their studies until the size and shape of the challenge is specified or indeed in the hope that somehow an election will intervene to change the agenda.

It does seem unlikely that a change of government would offer any respite from the onward march of improving professional standards. The FSA has made it very clear both in its state-ment in April and in last month’s consultation paper that advisers should not delay but should proceed on a “no regrets” basis with QCF Level 4 studies, secure in the knowledge that any gap created by changing goalposts next year can be bridged with CPD.

While this may be a pragmatic way of addressing growing concerns over qualifications, it does not remove the uncertainty.

The consultation paper confirmed that the FSSC will be consulting on QCF Level 4 standards for three months from August. The announcement of this timeline helps but the final details of the standards need to be published at the earliest possible date.

We should take this moment to recognise that achieving a QCF Level 4 qualification will be very difficult for many.

A quarter of advisers in our research say that they will leave the industry and the challenge of sitting further exams will have been an important contributory factor.

A key aspect of the debate has been the degree to which examinations or practical experience best assess the capability of advisers.

Against the need to sit formal qualifications, we believe that work-based assessment offers an appropriate alternative method for advisers to demonstrate QCF Level 4 knowledge. This should not be grandfathering by the back door but a rigorous assessment of practice, knowledge and experience.

While the current position in the consultation paper amounts to an oral examination, we would hope that through the consultation process broader proposals for work-based assessment will emerge.

With the need for additional qualifications in mind, we launched the Aviva Financial Adviser Academy in 2008 in conjunction with the CII.

With over 3,600 members, the academy’s popularity with advisers is clear and we offer free entry to all advisers who are members of a professional body. The academy website (www.aviva.-co.uk/academy) has been developed further recently based on feedback from our members. It offers an improved experience with easier navigation and new study material.

We have also launched our new package options of CII materials. We know that our members learn in different ways so to ensure that advisers get the support that works for them we now offer a total of four CII study packages. Whatever learning style works for you, we are confident that we have the right package.

The route ahead is nevertheless a very steep one. It is encouraging that so many advisers have committed themselves to the challenge and we intend to provide as much support as possible along the way. However, for those who have yet to begin the climb, the message is a clear one – there is no reason to delay and no time to lose.

RDR: the minimum qualifications required

  • QCA Level 4 or equivalent for all investment advisers by the end of 2012

  • From 2010, new entrants to the industry will be required to study towards the new minimum qualification

  • The new benchmark or “appropriate examination standard” will be set by the Financial Services and Skills Council following a three-month consultation, due to start in August

  • The new qualification is likely to include a number of set areas, including regulation and ethics, personal taxation, investment principles and risk, and practical application of technical knowledge

  • Advisers with existing QCA Level 4 qualifications but with some gaps in their knowledge will be able to use continual professional development to fill in the gaps but this must be completed by the end of 2012

  • Grandfathering for advisers in practice will not be allowed

  • Advisers who believe they meet the standard of QCA Level 4 minimum but do not have the formal qualifications will have the option of sitting a new oral examination rather than a written exam. This option is only available to advisers in practice at June 30, 2009 and will be removed at the end of 2012
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