In allowing oral assessments as an alternative to examinations, the FSA showed it had listened to industry concerns. This will not be an easy option and we await more details about the assessments. But it should address some of the legitimate worries that many advisers have about the examination route.
The FSA has stood firm against the large banks and insurers who have tried, and will continue to try, to water down the proposed professional requirements of tied and multi-tied advisers. Any waiving here would have sent out all the wrong signals.
A clear separation between advice and sales would have been preferable to the “restricted advice” tag, but if the legal barriers to this route really are too high this is an acceptable alternative.
The FSA will have to be on guard against firms who will try their best to blur the lines between the advice strands with clever marketing techniques and sales pitches.
The regulator has confirmed it is sticking to its 2012 deadline for firms to reach QCF level 4. In the run-up to the deadline, the FSA must keep a close eye on the numbers of advisers reaching the new requirements.
Advisers are having to change their business models, increase their qualifications and increase capital adequacy requirements while simultaneously dealing with the fall-out from the economic crisis. The FSA may need to be pragmatic with advisers who are moving in the right direction. An unnecessary cull of good advisers is in no one’s interests.
The Professional Standards Board must not simply become another layer of costs for firms and a rollback of FSA levies must accompany its introduction.
There is real concern that adviser charging could limit advice and more work is needed to see if commercial credit arrangements between adviser and client are workable.
The biggest question mark is around costs. The FSA estimates costs of £430m, plus £40m a year. Ernst & Young and others have been quick to query these figures, suggesting they have heavily underestimated the costs of adapting to adviser charging.
In its current guise, the RDR has the power to be a positive force for advisers and consumers. But we must be as sure as we can be that the FSA has got its sums right.