Draft guidance on the implementation of an international ISO personal financial planning standard in the UK is expected to be published by the British Standards Institute (BSI) for consultation on Friday.
The standard – BS ISO 22222 – was launched in the UK at the end of March and aims to raise service levels for consumers and set a benchmark for practitioners beyond the current regulatory requirements.
The draft guidance will recommend how the ISO financial planning certification body in the UK – most likely to be the BSI – can implement the international standard, and it is likely the standard will become available for use in the Autumn.
Although details of the process of accreditation are still being decided, Peter Williams, head of industry development at AEGON and vice chairman of the BSI’s financial services group, says to meet the standard advisers must:
- Have taken exams at level eight of the Scottish qualification framework;
- Have experience as a financial planner;
- Meet certain ethical requirements; and
- Be able to do a full financial plan, including implementing and monitoring.
Under general ISO rules individuals can self-declare that they meet standards, but Williams says the BSI committee will meet the international ISO body in June to try and make third party accreditation the rule.
This would mean firms could only use the ISO standard if they receive third party accreditation from a body which has met ISO conditions.
In the meantime, an ISO document recommends consumers seek advice from a financial planner who has undertaken third party accreditation.
Further, Williams says if firms falsely self-declare they could breach legal rules on misrepresentation and, if they incorrectly lay out the standards on their documentation, they could fall foul of the Financial Services Authority’s (FSA) requirements.
Another issue is whether the ISO standard could push the Institute of Financial Planning’s (IFP) Certified Financial Planner (CFP) status out of the market.
Williams believes the ISO standard and the CFP are complementary, but he warns CFPs will not automatically be able to use the ISO standard and they will still need to meet its requirements.
Although the CFP is an international brand, Williams argues it does not have consistency of quality whereas the ISO is “a firm standard around the world” which has “a wider appeal to consumers”.
But Nick Cann, chief executive of the IFP, says while the ISO standard has many benefits it does not go far enough in terms of reliability and stability.
He says the ISO standard merely recognises a process, whereas gaining CFP status through the IFP enables advisers to be part of a professional body, get continuing professional development (CPD) and have networking opportunities.
Cann suggests these are the qualities the IFP will promote to ensure it does not lose out on competition from the BSI.
He adds: “We still have to see how the ISO will operate in the UK – there are lots of processes, administration and functions to sort out. The ISO standards are rigorous and costly.”
Fay Goddard, deputy director general at the Association of Independent Financial Advisers (Aifa), suggests the ISO standard can be used as part of the process towards Chartered status because it is not about compliance or regulation but is a “stepping stone”.
She adds: “It is about practicing and operating to a high standard – it is not about lots of exams.”
If you have any comments you would like to add to this story or would like to speak to its author about a similar subject, telephone Emily Perryman on 020 7968 4554 or email [email protected].IFAonline
100 new clients
Achievements, charity work and other happy snippets
Square Mile’s series of informal interviews
Partner Insight: The rise in demand for DFM and multi manager solutions has been largely driven by new mandates from the regulator, says James Bampton, head of UK intermediary distribution at Architas