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Taking stock of alphabet soup

Improvements to IFA qualifications are an essential part of improving the industry&#39s reputation but they will not recapture public confidence on their own.

FSA chairman Sir Howard Davies confirms the regulator will conduct an investigation into industry exams and there are several items on the agenda. The review, starting in January, intends to bring in fewer, tougher exams and aims to simplify an exam system Davies says is inconsistent and confusing.

Exams are regarded highly by IFAs. The industry is a complex area and exams allow people to prove themselves in terms of their depth of knowledge. But having adequate knowledge is only one part of being an IFA. Building up a bank of experience and practical work is just as important and equal weight needs to be given to each.

There are several examining boards and many exams for IFAs to take and Davies says this results in customer confusion and an over use of designatory letters.

On the whole, IFAs agree with this opinion. There is a strong belief that the public do not understand these qualifications and take very little reassurance from them. Although consumers do not und erstand professional qualifications as a whole, professions such as law and accountancy have a long tradition of accepting only well educ ated individuals who undergo many years of study. The IFA industry does not have that tradition.

Many of the exams have obscure titles, such as G60, which mean nothing to consumers, so why would it instil public confidence?

IFA Holden Meehan advi ser Dan Kemp says: “Improving exams does not get to the heart of the problem. It is going to take years to rebuild consumer confidence and must be done by being more clientfocused and giving good advice.

“It is a bigger picture and advisers need to be committed to improving the reputation of the industry. It will not be a quick fix.”

The idea of unifying exam bonds is applauded by IFAs but introducing fewer, tougher exams could ignore sectors in the industry focusing on specialist areas.

The Analysts compliance officer Tom Kean says there needs to be a selection of exams that IFAs can marry up with how they operate their businesses, as a general exam could mean half of the areas studied would be irrelevant in practice.

The FSA is also recommending exams for back-office staff. Encouraging admin staff to become more involved with the business will bring many benefits but there is always a downside which could pile on additional problems.

Recruitment is an ongoing problem in the industry and exams could provide a path for back-office staff to become more involved in the industry. It would be impossible to expect people to undergo exams without getting some benefit and many admin staff would welcome the opportunity to expand their knowledge and improve their career opportunities.

Although it is in the interest of every business to ensure staff coming into contact with the public have a basic understanding of the industry, there will be staff who balk at the prospect of taking exams.

The industry believes making back-office exams compulsory would be an unwise move. They say back-office staff should be given the oppor tunity to develop their knowledge and in turn gain more responsibility but for this to work it needs to be their decision.

IFAs need to strive to ach ieve the highest standards for public trust and, while simplifying the exam process will go some way towards achieve this, the industry also needs to emphasise its integrity. At the end of the day, it is IFAs that have the greatest influence in changing the image.

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