FSCP backs adviser practicing certificates

Clients will benefit from a prominently displayed practicing certificate, detailing their adviser’s qualifications and commitment to professionalism, the Financial Services Consumer Panel (FSCP) says.

Last week, the FSA confirmed all retail investment advisers must hold a Statement of Professional Standing (SPS) if they want to give independent or restricted advice after January 2013.

It will provide customers with evidence that the adviser subscribes to a code of ethics and has kept their knowledge up to date.

Although the FSA will not require firms to present the SPS to consumers, it says the statement must also include the adviser’s individual reference number and confirmation their qualifications have been verified.

The FSCP says the ­certificates will reassure existing customers and inform prospective clients, and it recommends that they are prominently displayed in advisers’ offices.

“Many consumers will have seen similar practicing certificates when visiting their solicitor,” an FSCP spokesman says.

“We agree with the information [to be listed on the SPS], encompassing all the basics a potential client should expect to see. The SPS should be available for inspection and prominently displayed at the advisers’ premises.”

Alan Easter, strategy and business development director at IFA outsourcing business Honister Capital, also backs the introduction of SPSs, but says they should be subject to an in-depth cost-benefit analysis.

“Anything which improves consumer confidence must be a good thing, but I’m not sure the regulator truly understands that everything has an end cost to the consumer. As long as the cost of providing the statements is reasonable, it sounds like a good idea.”

The FSA estimates that an SPS will cost firms between £60 and £175 per adviser. They will be issued by accredited bodies, which will also be responsible for ensuring that individual advisers are qualified to RDR standards and that they keep their knowledge up to date through continued professional development (CPD).

Professional bodies have been invited to apply for accredited status, with the Institute of Financial Planning and the Chartered Institute for Securities and Investment already doing so.

The requirements form part of the FSA’s Policy Statement on professionalism, published on 20 January. The regulator said the paper completes its RDR policy rules.