Stakeholders question FSA’s 30-month qualifications deadline

Industry stakeholders are questioning the legitimacy of FSA proposals imposing a time limit on advisers to attain qualifications.

The FSA is consulting on applying a deadline of 30 months during which an individual must pass all modules of an exam it prescribes.

But the Association of IFAs (AIFA) is looking into whether the regulator requires special exemption from the Markets in Financial Instruments Directive (MiFID) before it can impose a time limit.

If FSA proposals fall outside the scope of MiFID — a directive introduced in 2007 to “harmonise" the European investment market - it can apply for exemption, usually under article 4.

The FSA's proposal differs from those of other regulators across Europe, which often leave it up to individual firms to impose their own qualification requirements.

The 30-month time limit is one of the six proposals suggested by FSA to improve its skills and ethics regime after it identified competence “failings” at some firms.

But AIFA says it is evaluating whether the FSA would require an article 4 exemption before it could introduce its proposals.

Andrew Strange, AIFA policy director, says: “It would appear the FSA would require an article 4 exemption from MiFID in order to impose a time limit on exams.”

However former AIFA deputy director general, and now Personal Finance Society chief executive, Fay Goddard, says the regulator may be able to introduce an exam deadline due to an exemption it obtained from MiFID four years ago.

At the time, most European nations, barring the UK with its Financial Planning Certificate, did not have mandatory qualifications for financial advisers.

The FSA, Goddard says, was able to retain its obligatory exam requirement under special exemption from MiFID. It is this exemption, she says, that may explain why the regulator would be in a position to impose the 30-month deadline.

Some advisers argue the 30-month requirement is not long enough for new entrants to become fully qualified.

“This proposal turns a new entrant into a full-time student with an unachievable deadline,” Peter Taylor says. “The industry wants professional status akin to the legal and accountancy professions but the FSA gives less time than it takes to become a hairdresser.”

But some say otherwise. Informed Choice managing director Martin Bamford says:
“The FSA is saying new advisers have to get their act together in 30 months and this is a timescale for advisers who are serious about gaining qualifications.”