In my last column, I mentioned we were still waiting for the final rules on the profession-alism strand of the retail distribution review. Well, it was not long coming. The FSA published PS 11/01 in mid-January, giving us the last pieces of the professionalism jigsaw.
The policy state-ment covers four main areas. It completes RDR policy and rules for professional standards, defines the role of accredited bodies, explains the purpose of statements of professional standing and talks about supervision and what data the FSA will require. I am sure by now you are aware of what qualification require-ments you have to meet so I will focus on the other three areas.
The FSA is clear that it remains a firm’s responsibility to ensure its advisers meet the professional standards and that the role of an accredited body is to independ-ently verify these standards have been met. The accredited bodies are complem-entary to, rather than duplicating, the role firms must fulfil.
An organisation wanting to become an accredited body must formally apply to the FSA and demonstrate that it:
- acts in the public interest and furthers the development of the profession;
- has carried out effective verification services;
- has appropriate systems and controls in place; and
- cooperates with the FSA on an ongoing basis.
The Chartered Insurance Institute (including the Personal Finance Society) satisfies point one and as we have been monitoring professional standards for the 28,000 PFS members for several years, we tick two and three as well.
Advisers from every part of the market, whether offering independent or restricted advice, will need a statement of professional standing from January 1, 2013. There has been some concern over the potential additional costs, which the FSA paper suggests could be around £60-£170. However, it will cost nothing for PFS members. They are automatically members of the CII, which has agreed to provide SPS as part of the membership benefits package.
It is hoped SPS will help in raising public awareness of the new standards. I accept that existing clients may not be impressed but we should not forget that SPS is primarily designed to help reassure those members of the public that have never sought advice before.
Finally, the FSA is introducing a new reporting require-ment that obliges firms to provide data on individual advisers, including which accredited body has provided their SPS. Firms will also be required, from July 2011, to report any breaches in the new standards.
The FSA will collate intelligence from all sources, including firms, the Financial Ombudsman Service and whistleblowers, in an attempt to identify anyone guilty of bad practice. It is in everyone’s interest to ensure the new system works.
Fay Goddard is chief executive of the Personal Finance Society