Additional qualifications could be imposed on specialist advisers giving advice on “non-mainstream products”.
The FSA first put the idea forward in its RDR discussion paper in 2007 and has returned to it in a discussion paper on product intervention published this week.
It suggests additional qualifications could be required for specialist advice, with advisers who have the minimum QCF level four level required to give investment advice post-RDR potentially restricted to advising on more mainstream products.
The FSA is encouraging the industry to discuss which activities might be defined as specialisms. The training and comp- etence sourcebook imposes qualification requirements on specialist advice for long-term care products, pension transfers and equity-release mortgages.
The FSA says: “Where we are concerned about the potential for certain non-mainstream products to lead to poor customer outcomes, we could introduce a new requirement for an appropriate qualification in addition to the qualification requirement for the mainstream activity, such as advice on packaged products.”
It cites its work on unregulated collective investment schemes last year, where the FSA warned IFAs about the use of the schemes, as an example of where additional competence requirements might have meant better consumer outcomes.
The FSA believes this approach could work alongside a ban on non-advised sales for some products which are either particularly complex or pose a high risk of consumer detriment.
The regulator adds: “This could ensure customers are only exposed to complex products under the advice process by advisers who can demonstrate a higher level of knowledge and skill.”
The discussion paper consultation period ends on April 21.
Philip J Milton & Company managing director Philip Milton says: “Surely a good all-round qualification is all that is necessary. Additional qualifications are no substitute for checking the underlying security of the products.”