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The row over using real client files en route to QCF Level 4 reignited this week after the FSA toughened its stance on using them in alternative assessments.
One IFA blasted the City watchdog for “testing fiction, not reality” after its most recent RDR paper ruled out a prominent role for client paperwork.
The FSA said it was “highly unlikely” real client documentation could be relied on to prove advisers’ knowledge.
Last December, the FSA invited examiners to develop options for alternative assessments besides oral equivalents to written exams.
It suggested practical assessments and coursework as viable alternatives, but warned any substitute arrangements would not be an “easy option”.
Some stakeholders hoped the FSA’s flexibility towards work-based assessments opened the door for the use of client files and real-life examples of competency.
But the most recent RDR paper reads: “Any assessment must be made by testing the learning outcomes and examination standards as published by the skills council (FSSC). As such, it is highly unlikely a substantive part of such an assessment could involve checking client files.”
SimplyBiz chairman Ken Davy, head of the Alternative Assessment Project Group, describes the FSA’s latest sentiments as a “backward step”.
He wants the regulator to clearly define “substantive” and says he will continue to push for more non-exam routes to QCF Level 4 based on “real life environments”.
“I hope this paper doesn’t rule out the advice given in last December’s RDR document, which determined it would be perfectly possible for an adviser to use past experience to get up to Level 4.”
The FSA cites Financial Services Consumer Panel concerns alternative assessments would provide an opportunity for the industry to “work around” the RDR requirements as a reason for its revised stance.
But Davy says the move risks being counter-productive.
“The danger is the FSA doesn’t ensure good advisers who can not do exams are still able to practice after 2012, and three million people, many of whom are elderly, are deprived of their trusted adviser.”
Tyne & Wear-based IFA Peter Taylor has criticised the FSA for its reluctance to measure advisers against “real-world” examples of their work.
“We should be checking reality rather than fiction,” he says. “I would prefer it if someone came along and reviewed my files and said ‘you have a weakness here and there so gap-fill.’
“We are dealing with real clients so we should use real-world examples to prove our knowledge.”
Fay Goddard, CEO of the Personal Finance Society (PFS), says the CII’s proposed alternative assessment, set to be piloted in September, may incorporate client file checks.
But she says even a greater use of client files would not satisfy some advisers’ hopes that Level 4 assessments are “not measured absolutely against [FSSC] exam standards”.
Keith Richards, distribution director at Tenet, says one option the FSA could have considered was making compliance companies apply Level 4 standards to their case checks.
He says: “A lot of directly-authorised advisers buy in compliance services. The FSA could have structured these services to QCF Level 4 standards and then they could have doubled-up as work-based assessments.
“That would have been a wise thing for the FSA to do. Perhaps it would have removed the emotion and threat of the current proposals, which basically state: ‘qualify or be expelled’.”
It is up to qualifications providers to draw up alternative assessment options for financial advisers, but all must meet FSSC requirements and be considered by the FSA.
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| Comment | Anger as FSA shuts door on using client files to reach Level 4 |
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Now I am confused !
Call me short sighted and inflexible if you will - but I am getting more and more disillusioned by the sheer number of 'options' people are being offered to help them get to level 4. What on earth is going on. Surely any adviser worth their salt will have built up sufficient knowledge over the years to go a long way to passing exams. Is it the studying that scares them - or the thoughts of a fail mark. As it is countless are turning to the 'easier' options of a multi guess exam, plus a 'letter' to a solictors practice (with copious amounts of time and research at their fingertips to help them) and a J08 style exam. Why does the industry not just throw in the towel and let them have level 4 by allowing the IFA's own internal compliance team to review their files for KPI's, review their PDP records and have a chat with the IFA's technical team who research / analyse / write the reports anyway. That should do the trick. Done job !!! By Decemeber 2012, it may boil down to this, if enough protest.
Posted by: NJH
FSA stance
While I agree with the sentimants of "stop moaning" and NJH, it is the holier than thou attitude of the parasitical cretins at the FSA that angers me. Their own incompetence and the lack of knowledge of their own staff is breathtaking. The lack of understanding of the industry is incredible, even after so many years of making up rules and regulations at an amazing pace in an effort to look as if they are achieving something to justify their miserable existence. Incidentally, I'm not against the exams, I qualified for the diploma over eight years ago. Now, in order to maintain my qualification level I'm having to pay to take Jo1 etc even though I hold G10,G20 and G60. mORE MONEY FOR THE cii.
Posted by: dave hedge
Rule by Opinion
The FSMA 2000 Section 2(3)© requires that the FSA “must have regard to -… the principle that a burden … which is imposed on a [authorised]person … should be proportionate to the benefits, considered in general terms, which are expected to result from the imposition of the burden …” S138 authorises the FSA to “make such rules … as it appears to be necessary or expedient for the purpose of protecting the interests of consumers.” Whilst many people consider that ever increasing educational standards increase the benefits to clients there is no hard evidence to substantiate this proposition. Indeed it could be argued that, in the financial sector, there is evidence to the contrary. After 2o years of increasing requirements for competence there is little compelling evidence to suggest that carrying qualifications has materially improved the standard of advice. As the FOS is so happy to point out the level of complaints is rising continually. There have been more “scandals” since qualification was brought in than before. The greatest impact of regulation was the introduction of registration, which disposed of the vast army of part-time irregulars (outside banks). The establishment of a basic level of competence, in order to gain registration, probably did help to raise standards - though there is no objective evidence. During the 90s there did appear to be a slow rising of standards and a confidence from the general public. The industry appeared to be fairly buoyant. Then came the FSA and the disappearance of polarisation. Then came mega regulations and demands for higher competence in certain areas e.g. pension transfers and equity release. So far as I can determine the changes contracted the markets, so the specialists could earn more. I am not aware that the changes protected “the interests of consumers.” I doubt that the FSA have any figures that would either confirm or deny that proposition. I have no problem with people studying and gaining qualifications. Hopefully it does raise standards. But there is no compelling evidence. I would actually argue that any rise in standards would come from peer pressure, upon which there is a large body of evidence. I would further argue that the Regulator’s activities has diminished the effect of peer pressure, thus assisting a minimal rise in standards. As an aside, I would also point out that the people that created the complex derivatives that brought the financial system to the point of collapse are extremely bright and well trained. Qualification for the sake of qualification is therefore not necessarily “for the purpose of protecting the interests of consumers.” At the present time its main purpose appears to be to justify the level of FSA staff. Which means that this burden is not “proportionate to the benefits … which are expected to result from the imposition of the burden …”. On this reading the FSA are then in breach of the FSMA 2000. However, since there is no controlling authority to which they have to answer, and I doubt if there is any individual, or group of individuals, that would be prepared to fund a court action to declare that the FSA is acting ultra vires, it seems that they can continue to do what they want. The final comment I would make is that legislation will need to be brought in to create the new Consumer Protection body. It would make sense for the industry to bring pressure on Parliament, through your local MP, to ensure that the next body be accountable, in the same way that any other public body is answerable in this country. That may have some impact on controlling the Topsy like growth in size and budget of the next FSA, and, more importantly, to curtail the freedom of the FSA to rule by regulation based solely on personal opinion rather than facts.
Posted by: Glen McKeown
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Lazy advisers
It has been known for around 4 or 5 years that higher level qualifications were going to be required. The energy, that it appears, many advisers spend moaning about having to do the exams and finding ways of not doing them is astounding. Had, in some cases, a small proportion been utilised to learning and taking exams then they would be sitting there now as Diploma holders. I am sick of advisers moaning on about all their years of experience, if you know so much the exams will be simple. Please stop moaning, get off your backsides and get on with it.
Posted by: Stop Moaning