FSA to enforce ethics code on advisers - Spear's Magazine

FSA to enforce ethics code on advisers

The Financial Services Authority (FSA) has today confirmed that, after extensive consultation, retail investment advisers will need to hold a Statement of Professional Standing (SPS) if they want to give independent or restricted advice after January 2013

The Financial Services Authority (FSA) has today confirmed that, after extensive consultation, retail investment advisers will need to hold a Statement of Professional Standing (SPS) if they want to give independent or restricted advice after January 2013.

The statement will provide customers with evidence that the adviser subscribes to a code of ethics, is qualified, and has kept their knowledge up to date.

The SPS will be issued by FSA accredited bodies which satisfy the following criteria:

  • they act in the public interest and further the development of the profession;

  • they carry out effective verification services;

  • they have appropriate systems and controls in place and provide evidence to us of continuing effectiveness; and

  • they cooperate with the FSA on an ongoing basis.

Today’s policy paper also sets out a requirement for investment advisers to complete at least 35 hours of Continuing Professional Development (CPD) each year, at least 21 hours of which must be structured. This could involve courses, lectures, seminars or workshops. All CPD has to focus on demonstrable change to improve advisers’ skills and knowledge. FSA research shows that over 70% of advisers are already achieving this amount of CPD.

When the RDR comes into force in January 2013, the FSA will start collecting information about individual advisers, such as the qualifications they hold and which accredited body they use. 

However, in preparation for 2013, the first of the Professionalism rules will come into force in July 2011, and from this point firms will be obliged to notify the FSA if any adviser falls below the required standard of competence or ethical behaviour. 

Sheila Nicoll, the FSA’s director of conduct policy, said:

“Rebuilding trust between customer and adviser is absolutely vital for the future prosperity of the retail investment market.

“In conjunction with the adviser charging rules announced earlier last year, today’s policy statement gives advisers the certainty they need to plan ahead for the RDR, whether that involves establishing a new business model based on adviser charging, working towards new qualifications, or filling gaps with CPD. Now is the time to prepare. 

“When advisers open for business in January 2013, a Statement of Professional Standing will be a vital indicator for customers that the person they are dealing with is subscribing to a code of ethics, has up-to-date knowledge, and is appropriately qualified.”



 

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