The Life Insurance Association has submitted radical proposals for reforms to the FSA regulatory exa...
The Life Insurance Association has submitted radical proposals for reforms to the FSA regulatory exam framework which actively address the professional image and business ethics of financial advisers.
In reply to the FSA's Discussion Paper 9,Examination Review, officials at the LIA propose that generic core exams which could be seen as the foundation level covering basic subjects, should include advisory roles, basic understating of economic theory, basic taxation, financial products and their use, state benefits, communications and counseling skills as well as business ethics.
How to improve the thinking and image of financial advisers is a concept the LIA has been keen to address for many months, as officials believe actively addressing the issue of moving advisers away from the concept of selling products and towards a business service would go a long way to putting past mistakes of the advisors market behind everyone.
Many of the issues addressed in the LIA response also refer to the FSA's recent polarisation consultation paper, CP121, and proposals put forward have been written to reflect many of the ideas for "Accredited Financial Advisers (AFA) and generic advisers.
In addition to introducing the concept of business ethics and core communication skills, the LIA has proposed that all generic advisers, such as banking, call centre, financial advisers, those who offer guidance on decision trees and journalists offering similar recommendations should be required to pass the foundation level exams.
GCSE students should also be allowed to take the examination too, says the LIA, but it must be made clear that those with the foundation certificate will not be allowed to give comprehensive financial advice to clients.
Advisers who want to offer comprehensive advice should then be required to complete a minimum number of relevant product and financial planning examinations on tax planning, pensions, savings and investments, protection and general insurance, mortgages and commercial and/or business advice to present advisers with knowledge of the market which is higher than FPC or its equivalent.
Rather than require all existing qualified advisers to pass new exams, proposals recommend that a "grand-fathering" system be required which allows advisers to sit case study assessments on all knowledge areas, and do so annually rather than sit specific exams.
Such assessments would help individuals to transfer their knowledge to other positions - where they would normally be required all assessments - if it can be proven they hold practicing certificates for the relevant sectors.
A system of credits could also be created to encourage financial advisers to broaden their knowledge and add to their qualifications, as existing advisers do with the AFPC, however, the paper fails to address the concerns of the FSA about the number of labels or designation many advisers use.
The LIA also stresses there needs to be a practical balance struck between the desire for one competence structure and the need to ensure relevant sectoral exams avoid unnecessary academic study which will go unused by advisers.
To find out more about the LIA proposals, click thru the right-hand link.
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