Financial advisers must meet tougher professional standards
Last updated on September 25th, 2019 at 4:53 am
Financial advisers face closer monitoring even after they have left a firm in an effort to enforce tougher professional standards.
The Financial Services Authority is tasking accreditation bodies and firms to maintain high standards by setting up a culture of random qualification checks and whistle-blowing.
A database tracking advisers that triggers ‘high risk’ alerts will follow advisers throughout their career.
Outline details of the new watchdog procedures were disclosed by the FSA in policy statement PS11/01.
The objective is to build a long-term profile of every adviser.
Firms must tell the FSA if any advisers fail to meet minimum levels of competence or ethical standards from July.
Additionally, all retail advisers must have a statement of professional standing (SPS) if they offer independent or restricted advice after January 2013.
FSA accredited bodies, like the Chartered Institute of Insurance, will random check a sample of 10% of advisers’ CPD to verify standards of professionalism.
Database will profile ‘high risk’ advisers
These bodies must police all their members to ensure they have proper qualifications, including any qualification gap-fill where required.
The new plans will see an increase in emphasis on how firms monitor and record the activities of individual advisers, even after they have left the firm, as it looks to build a longer term view and profile of advisers.
“We are concerned that individual firms only have access to a partial picture of an individual adviser – during the time that adviser is with them.
“We will be able to build a longer term view of the adviser as they move between firms during their career,” says the FSA policy document.
The policy paper requires investment advisers to complete at least 35 hours CPD each year and 21 of those hours must be structured.
The FSA will start collecting information about advisers when RDR starts in January 2013.
The aim of RDR is to rebuild trust between customers and financial advisers. The new rules, plus consumer directives on personal credit and mortgages from the European Union will give consumers more rights and introduce more transparency in contracts and advice.
The EU directive on personal credit comes in to force on February 1.