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The FSA has defended its decision to give accredited bodies permission to mandate membership before issuing advisers with a practicing certificate.
Advisers said the move breaks promises from the regulator and blurs human rights legislation which had previously stopped the FSA from forcing advisers to join a professional body.
In the past, the regulator has explicitly stated advisers would not need to be members of a body accredited with issuing statements of professional standing (SPS) in order to get one.
However, five of the six bodies awarded accredited status on a provisional basis earlier this week, including the Chartered Insurance Institute (CII) and Institute of Financial Planning (IFP), said membership is obligatory for advisers seeking an SPS from them.
The FSA says because at least one of the bodies - the Institute of Financial Services (IFS) - will not mandate membership, advisers still have the choice.
Every adviser will need to hold an SPS, which could cost anything between £60 and £175, issued by an accredited body confirming they have adhered to its ethical standards, hold the required qualifications and have completed appropriate CPD.
Accredited bodies will have the power to remove an adviser's SPS.
The FSA said it was a "commercial decision" for accredited bodies to choose to offer SPSs to members or not.
"Although the FSA requires advisers to have an SPS, it does not require advisers to become members of organisations," a spokesperson said.
"Therefore, advisers can look around for other accredited bodies that do not mandate membership."
Advisers said the FSA was wrong to permit accredited bodies to set rules on who they can distribute SPSs to.
"This is an ethical issue," said Phil Castle, managing director at Financial Escape. "The FSA said advisers would not need to be members to get their SPS, but most insist on it.
"The fact that at least one applicant for accredited status will offer SPSs to non-members lets the FSA off the hook a bit."
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@ Martin Bamford
Looking forward to your take on this Martin, bearing in mind your quote from 4th August 2010 - ...... Membership of a professional body is not compulsory, even once the Retail Distribution Review has been fully implemented. Posted by: Martin Bamford Martin, do you agree an ethical code will only have meaning if it is voluntary, hence there needs to be at least one accredited body who does nto make membership mandatory and measures ethics against compliance with the FSA's approved person requirement only? I'll rejoin a body in due course, provided one remains non mandatory (and that will not neccessarily be the one that will issue an SPS to non members, it will be the one which most closely matches what I believe is important)
Posted by: Phil Castle
Cronyism
It's cronyism. Stuff the mouths of the 'professional' bodies with Gold and they'll beccome fellow travellers to the proto-nationalisation.
Posted by: Steven Farrall (Adviser Alliance)
What will HMRC's view be?
CII R03 Manual, page 1/5, Test Of Status (for employee versus self employed) "Control" - In practice, many employees have considerable independance (especially skilled and professional employees). However, the degree of control may impact upon the decision. 1. Where there is the right to control the duties of the worker, and the method in which they are performed, this indicates employment. 2. The right to suspend or dismiss the worker is also an indication of employment. 3. Under a contract for services, it is usual to find that a person doing the work has a substantial measure of control over the method, timing and performance of the task, and that he or she normally works without supervision. If the SPS is not linked to membership of a professional body, arguably we remain eitehr self employed or in control via our own businesses. If ALL accredited bodies require membership to obtain an SPS, then at least 2 out of 3 of the above is failed, so does that make us employees of either the FSA or the accredited body?
Posted by: Nameless
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It only needs one
and then I do believe the FSA is off the hook. They do however need to ensure there always is one to maintain credability of the system. Otherwise it is a bit like saying you can only vote for an MP who is a member of a political party, i.e. a closed shop of professional politicians. I probably will re-join a professional body now. As that is a matter of choice and not compulsion and means that signing the code is something I have to accept being held to.
Posted by: Phil Castle