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Is the new adviser re-evaluation test fit for purpose?

Eyebrows have been raised over the cost and relevance of the assessment

Earlier this month, the FCA and Chartered Insurance Institute launched a new test to reassess the level of knowledge of advisers with the Level 4 Diploma in Financial Planning.

The Regulated Retail Investment Adviser Re-evaluation assessment is aimed at raising standards and competence, although it is not compulsory.

Since the new test was announced, I have spoken with a number of advisers and trainers, with a very mixed response.

How are networks ensuring advisers are competent?
First, let’s look at its fundamentals. The test is two hours long and consists of 100 multiple choice questions (both standard format and multiple response) across the CII’s R01 Financial Services, Regulation and Ethics, R02 Investment Principles and Risk, R03 Personal Taxation, R04 Pensions and Retirement Planning and R05 Financial Protection units. These are the units that form the bulk of the CII’s Level 4 Diploma in Financial Planning.

The syllabus includes areas such as responsibilities and obligations to consumers, financial crime, types of risk, taxation, retirement planning and protection planning.

It can certainly be argued that there is a need to re-evaluate the competence of advisers, and it is true that not all firms test their advisers’ knowledge on a yearly basis. However, there is a question mark over whether this specific test is the way to do it.

The required 35 hours of continuous professional development each year is meant to maintain competence. Many say evidence of this should suffice and that the extra testing will do little to really raise standards further.

Compliance tip: Preparing for compulsory reassessments

There are also those that say the test is simply a money-making exercise. Indeed, the cost has raised eyebrows. At £110 for CII/Personal Finance Society members or £150 for non-members, it does seem steep.That said, it is worth noting the FCA has stated it is working with some of the other bodies to create their own re-evaluation tests. Perhaps this means we will see similar tests more competitively priced from elsewhere in the future.

A very interesting point about this test is that the tax year 2018/19 will be examined until 31 August 2019 – five months after its end. This is in line with the CII’s examinable tax year for its qualifications and exam units, but why follow that for a test apparently developed to assess knowledge and understanding?

Indeed, the CII states that “this re-evaluation is for qualified financial planners who seek to measure or demonstrate their success in maintaining and applying up-to-date technical knowledge” and “this test evaluates your current technical knowledge gained through previous learning and regular CPD”.

LIBF plans additional adviser re-evaluation exam

The FCA states “the objective of the re-evaluation is to identify areas of strength and weakness in technical knowledge and its application that underpins suitable financial advice”. However, in April, June, July and August of every year, the test will be assessing the adviser on old technical knowledge from a past tax year.

Surely it would make more sense to test for the current tax year rather than for the previous? It certainly puts a question mark over whether this test really is fit for purpose.

Whatever your opinion, it will be interesting to see what the take-up is like despite the cost and the fact that it is out of date for five months of the year.

Perhaps it will be improved upon and become more fit for purpose in the near future, or perhaps another professional body will step in with another – better – option.

Catriona Standingford is managing director at Brand Financial Training



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There are 6 comments at the moment, we would love to hear your opinion too.

  1. The rules on tax year testing need to be amended now that the budget has moved to the Autumn. The Chancellor has just announced that PPR rules will change from April 2020. Now a lot can happen between now and then but on present policy the new rules won’t be tested until September 2021

  2. Having a 100 question multiple choice test is no way to test ongoing adviser competency. It should be down to each individual firm to have in place a robust system of checks to ensure each adviser is suitably qualified to meet the needs of their customers, rather than revisiting areas which they may not advise on anyway.

  3. Oh come on. The exam comes with tax tables – the actual numbers for tax rates could be random numbers generated for the exam – it’s the application which is being tested not the ability to remember rates and allowances which are printed in the paper.

    I think this is an absolute boon for any adviser who isn’t exam phobic. I know some individuals find formal examination a stressful and unpleasant experience – and for those we have … CPD.

    But for those of us who would rather bash out an exam after a few hours (well 35!) of prep then this is an absolutely brilliant development.

  4. It is not anywhere near as good at Testing ongoing competency as services like ‘Focus Progress’, which offer individual testing over upwards of 20 areas of knowledge for the same price as this 1 test

  5. Nicholas Pleasure 30th October 2018 at 9:23 am

    In order to achieve a challenging test where the pass rate is not always close to 100% you have to include a load of highly irrelevant and pointless questions that have very little to do with day to day advising. This means that advisers will be spending a large proportion of their free time learning stuff that they don’t need to know.

    For example, I had this misfortune to take the Competent Adviser Long Term Care test the other day. There were around five questions on Long Term Care bonds, which were an awful product that died, along with Scottish Amicable, in the mid 2000’s. It also asked lots of details stuff about who makes up the hospital discharge team, which you simply do not need to know to advise on LTC.

    Good, relevant CPD and an overview of client files will tell you all you need to know about the competence of an adviser.

  6. Some will choose CPD and some the exams. I suspect that if an individual is being managed out of a business the heat will be increased by being forced to do the exams. the question is if CPD is what is required why would you double up by doing an exam?

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