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Will QCF level 6 become the minimum?

I’m not sure many people watching FSA duo Hector Sants and Sheila Nicoll at this week’s Treasury select committee session would be confident in predicting that QCF level 4 will remain the benchmark for IFAs over the longer term.

Responding to a question about whether the qualification benchmark is likely to increase further in the future, the pair appeared to exchange knowing smiles before Sants suggested there were no “formal plans” to increase standards further (emphasis on formal).

The session is available to watch on the Parliament website here (fast forward to 15:26:30 to view the exchange) so you can judge for yourself.

Sants goes on to repeat previous FSA assertions that the issue will be kept under review.

There are currently 2,335 chartered financial planners and the CII estimates a further 9,000 are working towards chartered status. The IFP has 905 certified financial planners, although there is a some cross-over between chartered and certified.

It would be great to hear a bit more from the FSA about the huge amount of hard work taking place among advisers training up to level 4 and the large numbers now moving on to level 6.

Hopefully, one of the lessons the FSA learns from the RDR is that it is better to work hand in hand with the sector to improve standards and that any future regulatory intervention in this area is more focused on incentives rather than sticks.

Elsewhere, it was pretty shocking to hear that neither of the pair could provide figures for how many advisers were over 60. Whatever your view on the RDR, most would agree that examinations are a particularly sensitive issue for many older advisers.

Although lots of older advisers have passed or in the process of passing the exams there are a significant number who are very unhappy with being forced to abide by the new requirements.

The majority of anger I hear about RDR qualifications comes from a specific demographic. As Labour MP George Mudie points out in the session, many older advisers who only plan to remain in the industry for a few years feel outraged at having to gain higher qualifications.

When appearing in front of a Parliamentary committee which has been heavily lobbied by large numbers of older advisers you would expect senior FSA staff to be fully aware of the numbers affected.

These figures are central to any debate about grandfathering, which Sants admitted was finely balanced, or indeed any further pragmatism from the regulator over the RDR. It is worrying they were not in the minds of Sants and Nicoll when questioned by MPs.

Sants told MPs he would be happy to hear suggestions from the committee about areas where a majority of people would ask the regulator to rethink policy.

One area I would suggest is the current cliff edge deadline of January 2013. The FSA needs to take a more reasonable approach to advisers who may not hit the deadline.

One proposal could be a lower share of regulatory fees for anyone with the required qualification by January 2013 before a further deadline in the future when QCF level 4 would become the minimum standard. The regulator should also look again at sunset clauses for older advisers looking to leave the industry in the next few years.

Throughout the passage of the RDR the FSA has been pretty reckless in its lack of concern about the number of advisers remaining in the industry. It should be looking to encourage as many advisers as possible to gain higher qualifications and to continue to look after their clients whilst being more understanding of the situation facing older advisers.

Perhaps a little pressure from the TSC could see the regulator have another think about what it is looking to achieve from the RDR.

Paul McMillan is the editor of Money Marketing- follow him on twitter here


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There are 31 comments at the moment, we would love to hear your opinion too.

  1. I’ll get my level 6 when Hector and Sheila get theirs!!

  2. I wonder what qualifications half the financial journalists have reporting on such issues.
    Most of the articles beg the question whether English GCSE was one of them!

  3. The 60 year old adviser was 40/45 when this first raised its head, surely thats long enough for level 4.

  4. That all depends if the CII et al run out of money.

    Call me cynical

  5. “It would be great to here a bit more…”

    Here? Dere oh dere.

  6. I listened to Sants for several minutes and while there were noises coming out of his mouth, he didn’t actually say anything. He was so boring, the security guard in the background summed it all up for me – create a studied amount of tedium, send your audience to sleep then slip something in wihtout them noticing. Clever, from his point of view, admirable? Certainly not.

  7. It would be really interesting to know how many of those 2335 are authorised to advise as I suspect that quite a number are not.

    In fact, another interesting question would be how many of these are FSA employees?

  8. Tony – 4;04pm

    How masny fsa employees have FPC 1,2 and 3. Verry few I imagine

  9. “… although there is a some cross-over between chartered and certified.”

    Mamma mia! Itsa Paolo McMillan!

  10. Just imagine those poor hard done by apothacaries wingeing about having to train to become pharmacists.

    I for one do not want under-qualified doctors or pharamists prescribing or dispensing drugs to improve my health

    Why should I accept under-qualified advisors dispensing for my health

    Roll on RDR and well done FSA

    We operate in a highly technical arena and little knowledge and overzealous selling has got our industry the repuation it has

  11. It’s a knowledge based industry. How much notice to people need to prove they know what they claim to know?!

    Though the long stop issue needs pushing and the FSA must start to ‘interact’ with advising – that is coming out of that overpaid ivory tower.

  12. Retring IFA (one of the 20%) 11th March 2011 at 4:42 pm

    To Simon, my doctor tells me that he met the standard required when he passed his exams and qualified to become a doctor – and he hasn’t had to requalify since. He has a CPD programme and continues to do an excellent job. Do you want me to retake my driving test because driving conditions have changed over the years? Or has my driving evolved with those changes?

  13. to ‘retiring IFA’ one of the 20% –

    my doctor actually qualified to the equivalent of at least QCF level 6.

    I would be worried if my doctor was wingeing about having to jump QCF level 4

  14. Early retiring IFA 11th March 2011 at 5:05 pm

    Don’t for one moment think that all those numbered as Level 6 or even 4 are authorized advisers. Take all the BDM’s with providers out first and you won’t be left with many!
    I agree with the earlier statement, I passed my driving test many years ago and I am the equivalent of level 6 above the standard I was then and that is without resisting any future tests!
    I have been in the business now for 30 years and have never been a policy ‘flooger’ which most ‘exam qualified adviser’ call us level 3 plebs and I am nowhere near 60 yet. I feel very angry about having to ‘prove’ I have raised my standards over all those years, of course I have raised my b***dy standards, I wouldn’t have lasted this long if I hadn’t!! Exams only change peoples attitudes when they have them which is shameful.
    I leave you with the thought of, be very careful of what you wish for as you just might get it!!!

  15. I hear all the arguments for and against grandfathering. Moreover, the currently “qualified” fraternity who continue to beat the drum and chant the mantra “I did it why should not they! They of course being those not yet qualified.

    Sadly, what I do not see is much discussion about how the FSA are going to deal with their advisers – the complaints management teams going forward.

    How will the “qualified” feel about a complaint being dealt by someone who is one of the “un qualified”. Particularly, when that “un qualified” has the last say!

    There needs to be some consistency does there not? And until such times as those that are judging the advice are suitably qualified, how can it be that an unqualified on this side of the fence has any less right to advise, or am I missing something?

  16. In my practice we have three RIs, one Chartered (me) one will be Chartered this year and the other first half of 2012, aged 44, 47.55, all advisers, all with more than 10 years experience as advisers (2 with 20) none work for the FSA all have families and we have 10 staff to feed, stop whining.

    Oh and if my doctor told me he took 3 o levels 15 years ago but knows his stuff, I would run a mile. Role on 10,000+ Chartered advisers

  17. Stop fighting amongst yourselves and battle the real enemy, the FSA who will get you one way or another, whether you are level 4 6 10 or whatever level you want to boast about.
    If they cant get you that way they will get you with capital adequacy, non compliance over some silly little ommission or a gigantic fscs levy with only a few firms left to pay it will soon see your demise.
    One way or another their total remit is your total destruction. You may not have noticed it as you are too busy fighting each other.

  18. Simon, you’ve omitted that when Doctors first brought in higher qualifications, those already in practice were grandfathered in.

    I’ve been in practice more than 30 years, having previously been head of the life and pensions department for a large firm of Lloyds Insurance Brokers. In those days few people comparatively took the paper qualifications. Prior to that I was trained (properly) by two life companies. They didn’t let you out on the road till you knew your stuff.

    I have FPC3 and a financed based qualification from an earlier career.

    Frankly I am astonished at some of the poor advice I see from practitioners with level 4 and higher paper qualifications.

    I wouldn’t get involved with something outside my knowledge base: no sensible professional person would do that. I’d call in an expert and have a number to whom I can go if needed. They come to me when they need me. So my knowledge gaps are already covered.

    RDR is a massive bloody mess which is only going forward because the FSA board “didn’t want to lose face.”

    As a result of this the public the FSA is supposed to protect will lose the right to low cost advice at a time when our economy needs it most.

    Justify that if you can…

  19. Mr Sants is questioned as to why he is pressing ahead with the RDR (at the cost of £1.7 billion) when events in Europe are likely to overtake it. In his response his sights £50 billion pounds of customer detriment and the current PPI claims. Is Mr Sants not aware that PPI sales will not be affected in any way by the RDR?

    Its absolutely beggars belief. Please please please can somebody challenge this. Is this how decisions are made at the FSA? Based on misunderstanding and misinformation?

  20. David Quarrell APFS 11th March 2011 at 7:49 pm

    Simon are you a holier than thou level 6? I am level 6 and worked dam hard to get there and I still think RDR and the FSA are a load of tosh! and recognise that a lot of our industry are well suited to advise without knowing Garbage that the FSA deem a requirement! I fyou were dying in the gutter and a “doctor” saved your life would you check his letters and complain if he failed your competance check?

  21. Much depends on how one defines ‘profession’. One of the standard indicators is a high level of specialist knowledge and understanding, proven by formal assessment.

    By way of comparison, Legal Executives’ final examinations are all Level 6. Solicitors’ and barristers’ finals are higher still – and all entrants must be graduates or Legal Executives who have taken further Level 6 examinations to qualify for exemption for the Common Professional Examination.

    CPE is not the final qualification – it’s just the entry gate to the final level course and exams.

  22. I’ve been saying this since 2002 – level 6 will be the minimum. It ain’t no big deal. Some will get there, some won’t . . . the profession will evolve.

    What most fail to realise about “low cost advice when people need it the most” is that those who need “low cost advice” don’t really need to see a level 6 adviser. A simple flow sale would do.

    Pointless talking nonsense about how the less well off can’t afford advice when they don’t need complex advice in the first place. Understand that and get on with the job.

    There will always be advisers who undersell their services (eg mortgage brokers who failed to charge and now are going bust). These people created a mindset in the wider community that advice is free.

    In time, all will change – for the better.

  23. Re tony | 11 Mar 2011 5:28 pm

    10 staff! no wonder you have time to sit exams!
    Lucky you are not a sole trader who does EVERYTHING himself
    Maybe you should change your name to jack, as in, I’m alright.
    People like you who cannot see things from any angle other than your own are just like the fsa sitting in their ivory tower.

  24. Just to address the specific quesyion posed by Tony on 11 Mar 2011 at 4:04 pm…

    He asked “It would be really interesting to know how many of those 2335 are authorised to advise as I suspect that quite a number are not.”

    A reasonable question: The answer is that 1858 Chartered Financial Planners are authorised advisers.

    David Ross
    Chartered Insurance Institute

  25. I’m 20 points short of level 6 and expect to reach level 6 within the next month. I’m in my mid 40’s with 27 years experience, have ran my own business alone (doing everything) for 13 years. I want another 15 – 20 years in this industry and feel that eventually level 6 will be the minimum to operate in certain areas of advice. I also feel that at some point in the future my little business will be squashed or priced out by the regulator so at some point I will have to merge/be taken over/ let it sink/ and work for a larger organisation. It seems in the end the real losers will be the smaller, loyal clients who nobody can afford to deal with anymore. This industry is in a sad state.

  26. So let’s stick with the Dr analogy shall we?
    “So Mr Doctor what professional qualifications have you got?”
    Answer: “Oh none actually, but I have been practicing for 30 years, read the odd medical journal, and go out to lunch with the odd drug company rep. As far as I know nobody has died yet!!”
    “That’s great cos’ I need a heart transplant.”

  27. Anon @ 2.29 Yes lets stick with the Dr analogy.

    Doctors do not do heart transplants. Surgeons who have the title Dr. do them. By the same token a surgeon will not initially treat hemorrhoids.He may well perform surgery on them eventually but he will not be the initial port of call.Try and see the distinction.

  28. @ Jon 11 Mar 3:56 Just for the record you may want to change your claim. David Jackman ( Head of Industry Training for the NEW FSA) said in 1999 that
    “The idea that the AFPC will be come a basic requirement is unrealistic” So 11 or 12 years ago the FSA did not argue for higher qualifications – so your 15 to 20 year figure is not really correct.

    Perhaps you are using an FSA calculator ?

  29. Am i the only who shudders to think of the mis-selling scandals that will hit a few years after RDR is implmented.

    The vast majority of the population will not receive advice in any shape or form and will be sold products.

    You can imagine it now. “You want some life cover sir of course how much cover would you like” (as no factfind was done we dont need to worry about the fact that you have no dependents or that your DIS is sufficient for your needs either).

  30. # David Ross | 14 Mar 2011 10:34 am

    “A reasonable question: The answer is that 1858 Chartered Financial Planners are authorised advisers.”

    David thanks for that. 80% of chartered planners are advisers. Can you tell us how many Chartered Financial Planners work at the FSA or is that privileged information?


  31. Simon

    I am extremely happy with my GP who is more than able to deal with the vast majority of conditions I may develop however should I develop a condition that is outside of the norm, I know that my GP will refer me to a suitably qualified Consultant for specialist treatment.

    Doesn’t take a brain surgeon to translate this into the FS world does it?

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