Two minute recap: Statements of Professional Standing

David Thomson, director of policy and public affairs at the Chartered Insurance Institute, gives a quick recap of the rules surrounding Statements of Professional Standing.

The retail distribution review (RDR) is set to transform the financial advice sector when it comes into effect after December 2012, not least as to how advisers demonstrate professionalism in a regulatory context.

In addition to achieving a minimum qualification equivalent to QCF level 4, it is less well known that a regulated adviser will also be required to obtain and uphold a Statement of Professional Standing (SPS).

The SPS is an annual declaration which will verify that an adviser has acted in accordance with, and continues to subscribe to, the FSA’s requirements for professional standards from 1 January 2013. Advisers will need an SPS to confirm they:

• Adhere to a code of conduct and ethical standards;
• Hold an appropriate qualification (including gap-fill if appropriate);
• Undertake appropriate continuing professional development (CPD) on an annual basis.

Who needs one and how do you get it?

Individual advisers on financial and independent matters will be required to hold a SPS, including banks, wealth managers, IFAs and stockbrokers.

SPS verification will come from an accredited body approved by the FSA, although the obligation to assess and maintain staff competency remains with the firm. The FSA is currently consulting on prospective accrediting bodies.

As a record of compliance with FSA guidelines, the SPS will include:

• The adviser’s name;
• Full name and contact details of the accredited body, including a named signatory;
• The expiry date (12 months from the date of verification);
• Acknowledgement that the qualification(s) has been verified;
• A signed declaration by the individual confirming that they have adhered to the FSA’s standards in relation to CPD and ethics;
• Individual reference number as it appears on the FSA register;
• Recommendations that the reader carries out checks into the adviser’s inclusion on the FSA Register and instructions on how to do so.

Advisers must complete a minimum of 35 hours of relevant CPD each year, with at least 21 hours taking the form of structured learning such as seminars, lectures, conferences, workshops, courses or e-learning programmes.

Although a SPS is not formally required until January 2013, the CII – which is bidding to become an accredited body – intends to offer SPSs from the latter part of 2011 to appropriately qualified advisers who are already members of the CII or Personal Finance Society (PFS).

Validate your status

The SPS was originally devised to inspire consumer confidence. While there is no obligation for the individual to present their SPS, we are encouraging advisers to use it to validate their professional status to their clients and the wider public.

After all, the SPS is potentially an excellent mechanism to demonstrate competency and develop trust with existing and potential clients. Hopefully over time this will help improve the public perception of the financial advice sector.