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RDR: FSA to be more flexible on alternative assessment

The FSA is to be more flexible on alternative assessments for “those who do not wish to sit oral or written exams” under the retail distribution review, admitting that its previous proposals for oral exams were too restrictive.

In today’s RDR consultation paper the FSA says it will offer alternative forms of assessment on an ongoing basis, not just during the transitional period.

The paper says: “We consider that this additional flexibility will enable awarding organisations to cater for those who do not wish to sit written or oral exams.”

On oral exams, the paper says: “We conclude that oral equivalents are too restrictive a definition and that we should allow other assessment methodologies to be used, provided they meet the requirements of the relevant qualifications regulator.

“We have received feedback that suggests that allowing alternative assessments only as a transitional provision hinders their development. As a result, we are proposing that these methods be permitted on an ongoing basis rather than just for transition.”

The FSA points out that OfQual allows its awarding bodies flexibility in assessment methodology, such as practical assessment and coursework.

The FSA says the Financial Services Skills Council will publish final standards for the content of the new QCF level four qualifications in March 2010 and OfQual will approve the first new qualifications in June 2010.

The regulator says study materials are likely to be available from October 2010, and new entrants to the industry from then onwards will be able to use the new qualifications.

The Association of Independent Financial Advisers welcomes the FSA’s new approach to assessments.

Director general Chris Cummings says: “We welcome today’s decision by FSA to be more flexible in their approach to alternative assessments. The removal of the expiry date for such assessments and extension to new entrants sends a positive message to the profession, and to those organisations that could assist with the delivery of such proposals.”

Cummings adds: “Today’s consultation paper from FSA is a welcome step forward in the debate on professionalism within the RDR. Aifa supports initiatives to improve levels of trust and consumer confidence in financial services, and urge FSA to build on that which works.”

The paper says that alternative assessments must meet all of the following criteria:
• all parts must be assessed at, or above, the equivalent of QCF Level 4;
• the content must meet the FSSC exam standards (current or new);
• the award (qualification) must be made by a recognised awarding body (such as OfQual or QAA); and
• the assessment methodology must satisfy the requirements of the qualifications regulator (OfQual for vocational qualifications and QAA for academic
qualifications) and must be robust, including rigorously high standards of anti-plagiarism monitoring by the awarding organisation.


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There are 26 comments at the moment, we would love to hear your opinion too.

  1. So we will not know the actual exams required until June 2010 and study materials will not be available until October 2010. That means many advisers are going to have just 2 years to get qualified. The CII have said that on average it takes two and half years to get to Diploma.

    The timescale is very tight. Especially if you find exams like G60 or J05 or others are not acceptable.

  2. Hmmm. Wondering if this is quantitative easing for professional standards????

  3. Total shambles.

    I already have JO4 & JO5 as I tend to do a lot of work relating to pensions. For the majority of people the largest savings pot is often a pension scheme, but this is not deemed a core area by the FSA.

    Total shambles and a waste of a year studying to get these!

  4. I am glad THE FSA has thought this one through, it really gives me the confidence in them!

  5. Perhaps a flicker of light at the end of the tunnel?

    I am one of those advisers who has no intention what so ever to take yet another written or oral examination in order to be allowed to earn less and less, or at best stand still.

    I have said and will continue to say that the IFA community is not and has never been the problem with the Financial Services Industry. The problem is the banks and bank assurers who have been driving this witch hunt against IFAs for years, in order to regain more and more distribution. The problem is and always has been that the level of competency within the banks is lower than even FPC level. The Chartered Insistute of Bankers in Scotland has realised this and are pushing their members to study up to our basic standards – the English equivalent should follow their lead.

    It will interesting to see what compromise alternative assesment to exams and oral tests comes along & there’s little point in hitting the books until the FSA and Skills Council work this out.

    Hey ho – at least Christmas is nearly here.

  6. This looks like good news. Lets hope it turn out to be that. We all need to be compliant, but exams are not the way forward.

    Taking a lawyers as an example they do not take further exams once they become qualified even though law’s change all the time. A barrister will be appointed a Queens Counsel (QC) on application without the need to take an exam.

  7. Once again, the bleating old men who cling to their worthless FPC3 certificate have got their way and do not have to do exams.

    I am bored listening to them witter on about years of experience – it is probably years of doing a bad job.

    If they are that good – just get on with it and do the exams.

    From an already Diploma qualified adviser.

  8. Tony – have your comments about advisers who work for banks been formed after you’ve completed lengthy research and investigation, or are you wholly reliant on 3rd hand information?

    I’ve worked for a number of organisations and have experienced good and not so good advisers at all of them. All organisations (without exception) have dealt with the poorer advisers appropriately.

    I now work for a Bank (for the first time) and can honestly say, their advisers are head and shoulders above those at the previous 4 organisations I’ve worked for that offer Financial Advice.

    Back to RDR:
    Many comments over the last year or so are from people who believe that because they’ve been in the industry for a long time (and haven’t developed themselves more than the absolute minimum needed to stay in the industry) they should be excluded from the requirements. They miss the point, in that it is exactly because of people like them that the FSA had to introduce RDR including the exam requirements.

    I’ve worked in the industry for nearly 20 years and obtained AFPC many years ago (so have the qualifications needed for RDR). I’m not saying it was easy, just that we all had the same opportunity to take these exams at any time we had wanted previously and that as the “experts” many people claim to be, surely a few more exams shouldn’t be too hard?

    If people can’t pass the exams in the time given, this more than demonstrates that they should not be allowed to give advice to the public as they do not have sufficient knowledge….

    Pass the exams, stop complaining…..

  9. In the experience versus qualifications debate, would you rather be out at sea in a force 8 gale with an experienced sailor or some numpty with a piece of paper that says he/she is a ‘qualified’ day skipper.
    It pays to have been around the block a few times, but unfortunately there will always be some know it alls who think otherwise!

  10. I completely disagree with the sailing analogy. I have been at sea with qualified Yacht Masters and frankly they had no idea while I have sailed with people who have no qualifications what so ever but have experience and they made the correct decsions when it mattered.

    The only gripe I have is that their is only sittings for the exams every 6 months! Lets face it exam technique is very different to ‘Good Advice’. Its like saying every one who passes the driving test is a good driver but we all know that is simply not true as not all drivers look to see what might potentialy might happen in front of them as do all good advisers!

  11. Anonymous at 2:20 – you are actually agreeing with my point – experience is everything – the paper is worth nothing without it.

  12. Obviously you’d want a skipper who has experience and qualifications rather than an experienced skipper who can’t pass exams.

    Given the choice between a qualified and experienced accountant/solicitor or an unqualified accountant/solicitor, I’d go for the qualified and experienced option every day!!

    We all know that experience/time served in the industry counts for nothing unless that experience was good (there are hundreds of upheld complaints against experienced advisers every year, clearly demonstrating that they’ve disadvantaged their clients).

    If certain people spent as much time and effort on trying to pass the exams as they do on pointless moaning they’d be in a much better position….

  13. Andy – so why don’t the FSA target those who get the complaints and leave me to get on with servicing my clients. I am office based so don’t waste time driving around the country, never take a lunch break and quite frankly I have no time spare to study for things that are of no interest to me or my clients, which is what CII exams mainly are. Given 5 years to retirement, would you want to waste precious time just so that you can carry on doing what you have for most of your working life?

  14. David Trenner - Intelligent Pensions 16th December 2009 at 3:41 pm

    Joe, I cannot understand how you have worked in our profession for 40 years and never bothered to get any qualifications.

    Why not make sure that the last 5 years of your working life are the years when you can demonstrate that you really know what you are talking about?!

  15. Who says I haven’t – I have done various additional, such as mortgage, Equity release, (now not sufficient) and also wasted considerable time on the pensions simplification which ended up an absolute farce. Those were the ones that convinced me that it is a waste of time.
    Will someone tell me which clients I can ignore to take time out for exams? I am very happy for anyone to assess what I do, how much I charge and how fairly I treat my customers (sorry, clients).

  16. @ David Trenner

    David I sell ISA and OEIC. I do not pretend to give complex advise as so many do. I have a BA (hons) in Business Studies plus 3 post graduate qualifications including an MBA from New York and a Master of Science from Illionois.

    In what way would my clients or I benefit from me taking pension exams, supervision exams etc ?

    I accept that I am not qualified to advise on Drawdown, Off-shore, complex taxation, divorce…. an on and on. BUT then neither would anyone be who only has Q level 4.

    Is ther not a danger here that the public as well as “advisers” will take these qualifications too seriously and that bad advise will be given.

    The majority should be left alone to sell with the very small professional segment being required to have Q level 6 absolute minimum.

    This one size fits all exam is benefits no one as far as I can see.

  17. The FSA has bowed to the inevitable; the insistence on every level 3 adviser getting into the exam room by 2012 would have led to a mass exodus of perfectly competent and decent advisers. This was an untenable position.

    I cannot be the only person disgusted by the attitude of some who have contributed to this debate. It is difficult to escape the conclusion that they wish to be part of some sort of elite. On this very thread some buffoon has spoken of “bleating old men” getting their way with their worthless level 3. I support the majority of these level 3 advisers in their pleas to be spared the exam room and I am a recently qualified cfp-probably when the dust has settled a level six qualification – of advanced years. I don’t think this necesarily singles me out and I don’t think everyone else in my position should do the same.

    Those who urged elitism and demanded level four qualifications via the exam system appear to have lost the argument. Excellent. Now get on with your lives and stop telling us how terribly clever you are.

  18. Some of the worst advice I have seen over the years has come from Chartered Financial Planners. Indeed, I have had to put in complaints in two cases in the last year and both were done by CFPs. The qualification alone means nothing.

    The average consumer doesnt need a highly qualified adviser and many advisers specialise in certain areas.

    I have no problem with higher qualifications but it would be better to perhaps classify certain transactions as requiring a certain qualification. If you dont have the qualification you cannot transact in that area. Otherwise sitting an exam in an area that you dont transact in is pointless as your knowledge is not being put to use and any benefit of that exam will be lost within a few years.

    Apart from that, my only gripe is that the timescale is too tight.

  19. Let’s face it in a very straightforward Yorkshire fashion.

    Those who state that Lawyers/Solicitors and Accountants and for that matter Actuaries only have to qualify once and do not have to continually sit exams are missing the point entirely. They all do “on the job cpd” (to utilise jargon for keeping up to date with legislation), or they would lose their fee paying clients to more proficient professionals.

    In the Financial Services arena, as a whole, very few have advisers have fee paying clients and most rely on commissions from product sales in order to generate profit and sell/arrange/advise on products which require little technical knowledge.

    There is a clear distinction between “professional” and “salesman” and I am proud to be a bit of both as it is in the best interests of my clients for me to be able to communicate what are sometimes complex concepts for the “layman” to understand in very simple terms.

    The disticntion between a professional and a salesman? – A degree in Law, Accountancy or Maths is 3 or 4 years of study (less drinking time for the cynics), the additional work to qualify as an actuary is approximately 2 years. Time taken to nobble off FPC 1, 2 and 3 – for most would be a weeks worth of reading, two multiple choice exams and a “lengthy” written exam.

    Do FA’s deserve to be professionals on the basis of FPC and experience? – No!
    Do I advocate fees over commission? – No!
    Do I advocate exams over experience? – No!
    Are salesman good for the country with respect to the savings and protection gap? – Yes!

    I therefore ask, is there no way for us to co-exist and cross refer as this would be to the benefit of the consumer/client/customer or whatever we are now supposed to call them these days?

    I stand with my head above the parapet ready to be shot down, but maybe there is room for us all to work together for the greater good of the consumer and they should be able to pay for it however they like – let’s not argue, let’s come up with a solution and lobby!!!

    Have a good Christmas all x

  20. Totally agree with the previous mail, to add to the debate I think it is absurd that someone can pass FPC and then potentially invest millions and millions of pounds for clients on what is probably worth 1.5 A Level.
    Therefore raising the professional standards is important and overdue.
    Regarding the moving goals posts , yes I agree it is a mess but we have known this is coming for years! Claiming you have been holding off exams because you didn’t know what is required is missing the point, don’t you want to increase your knowledge?
    This industry has constantly changed (as other industries look at the trades so get that chip off your shoulder).
    Agree regarding experience and ultimately RDR will fail as it will reduce distributon of products with advice, however removal of commission for investments and pensions can only be a good thing.
    The people who are scared of RDR are advisers who are scared to admit to their clients they are not free and will cost them money.

  21. Anyone complaining about loss of earnings or experience should think carefully. You are part of the problem of our industry’s poor reputation. If you want to work in the industry why should you be qualified by experience. Experience can lead to bad habits! I have worked in both bank assurance and as an IFA and am Dip qualified. I have come across dishonest advisers in both environments and believe higher qualification standards are the only way to weed these people out.

  22. to anonymous 10.52 How on earth will higher qualifications weed out dishonest advisers?
    If you are a dishonest person no amount of qualifications will make you honest.I think everyone is missing the point of the whole argument – Is it right and lawful that the fsa should deem an adviser competent one day but not the next. This will be the reality for many advisers on 1st January 2010. If thr fsa can do that what is to stop them in another few years from moving the goalposts again.What will all the smug people do then? Will we have comments like “old bleaters/dinosaurs with level 4 should be kicked out they arepart of problem.It is so sad that the RDR has set adviser against adviser as maybe together we could achieve something.

  23. Should we all be open and honest about our qualifications/experience and give the consumer the option of making an informed decision?
    I’d love to see an “old bleater” explain to a client:
    “The FSA proposed a qualification that I chose not to get because (1) it would be too much hard work, (2) I don’t know the subject material and would have had to study instead of service my clients, (3) my 30 years experience should mean I don’t have to sit any exams (despite constant changes in the Financial Services industry, taxation, products, legislation, etc, etc, etc…), (4) the exams are not relevant and I can’t understand why the regulator expects anyone to have them, (5) I invested 12 hours study to get my FPC3 so I know everything there is to know, (6) if I had passed the exams, they’d only want me to pass more in the future. Alternatively, Mr Client, you could see an adviser elsewhere who decided to pass the exams and is far more qualified than me”.

    If I were a client of this “old bleater”, I’d soon be an ex-client.

    Get a grip, there’s no choice, pass the exams…..

  24. Dear Sad,

    Entirely agree, there can be non-qualified dishonest people and qualified dishonest people ruining our reputation as a whole and there probably always will be. If we aspire, maybe we can get as many FA jokes as Lawyer jokes over time ;o).

    However, we are not talking about a quick shift to higher qualifications, we have all known about this for some time and many have been hanging on in the hope that it doesn’t happen. In fact, so many advisers are hanging their heads and stating that they will not advise in a post RDR world that it saddens me, they are the ones who can teach the next generation of advisers the skills they need to do some real good.

    As things stand, the next generation of adviser will be employed by banks peddling insignificant and pointless policies for miniscule bonuses and filling the big institutions pockets. When in actual fact, with some “sales” skills, there may be some people who can ensure their clients financial security for years to come.

    Fees or Commission? Should read:

    Sound Financial Advice for the Wealthy or for those who need it most?

    Bundled charges should be banished into the mists of time and CAR should be adopted for at least pensions and investments.

  25. All advisors should be able to demonstrate that they have the knowledge & ability to give advice in the areas in which they do business. There is room for people with limited knowledge but they should be limited in the areas in which they can operate. In the past more people were sold pensions & savings plans as there were more insurance company reps selling them. A one size fits all approach to exams isn’t going to benefit the lower end of the market who won’t have access to advice as the reduced number of fully qualified advisors won’t want to service them for a £50 a month stakeholder pension plan. As for the sailor analogy I would be happy to be with an experienced sailor without qualifications as long as he wasn’t in a new boat that he had no knowledge or experience in.

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