The initial findings of the FSA’s retail distribution review will be announced at the end of June and the market will be presented with a discussion paper to contemplate the proposals being put forward.
The FSA has also announced that the Mifid introduction also means that the menu system and IDD will have to go. These are exciting times and the discussions seem to have been wide-ranging, giving consideration to the whole of distribution and not just the IFA.
It is encouraging to see that the FSA is prepared to concede that some of the regulation inherited or introduced in the first six years is no longer effective for a market which itself is naturally repolarising as it matures.
The IFP has been involved on the RDR with the group that has been reviewing professionalism and reputation. This is key to the IFP’s work over the 21 years of its existence. Our vision is to achieve the widest recognition of the financial planning profession in the UK with our specific mission to build and maintain the profession in the UK for the benefit of consumers.
To achieve these goals, there has to be some differentiation of financial planning and what financial planners do. To have a profession that is recognised, qualifications and competencies have to be the equivalent of other professions. In developing the profession, the job of a financial planner has to be obvious and understood by all who want to be connected with it. Whether in school, university or within other careers, the career of a financial planner has to be attractive, obvious and pursued.
Dan Waters from the FSA gave some clues in a speech made at the Securities Institute. He referred to issues of re-segmenting the marketplace to better reflect the consumer experience and choice, hopefully leading to a segment relating directly to the financial planning community which would be desirable. This would be the only segment which was able to call itself financial planners.
Individuals able to use this title would need to have obtained a degree-level qualification recognised by the Financial Services Skills Council. The individuals would also have to be a member of a relevant professional body and bound by a code of ethics and practice standards that has some teeth and credibility. The expectation in today’s terms would be that the individual would have to be the equivalent of Certified Financial Planner accredited or Chartered Financial Planner and a member of the CII or the IFP.
As usual, there are a number of calls for a single body to represent the industry. From the IFP’s perspective, the issue is around a single professional body and what that would look like.
Financial planning involves the whole range of specialisms, starting with insurance, banking, investment and tax. To properly develop the profession, such a body must be indepen-dent enough to work with the various components of education without any form of conflict. The possibility of a monopoly which controls the profession and the examinations is unlikely to be the most preferred route.
There are, however, opportunities to co-operate with issues such as codes of conduct and CPD to make it easier for the financial planner to move through their career, gaining maximum benefit and choice while still enjoying the journey.
Nick Cann is chief executive of the IFP.