The FSA could require firms to inform the regulator if competence and ethics issues arise with their advisers.
In its quarterly consultation paper, launched today, the FSA proposes draft rules for the Training and Competence module (TC) of the FSA Handbook forcing firms to notify it about concerns with adviser behaviour.
It follows a discussion on professional notifications in its June consultation paper (CP10/14), which described two potential new data reporting requirements relating to advisers in the scope of the RDR.
In today's paper, the FSA says it will maintain its proposals to collect professional standards data on advisers, including qualifications held and accredited body used, and transactional data linking product sales information to individual advisers.
But following positive industry feedback for what it terms an "alternative approach" it is now consulting on plans to allow firms to monitor adviser behaviour, in addition to requiring the professional standards and transactional data.
Feedback from CP10/14 will be set out in a Policy Statement for that consultation in December 2010, with the rules set to in installed in January next year.
Firms are already obliged to monitor the competence and ethical behaviour of their advisers, but the new requirement would mean firms must notify the FSA if they identify issues with an adviser's competence, which includes ethical behaviour.
The FSA says it expects such notifications to arise where an adviser has been assessed as competent, but is no longer considered so, or failed to attain an appropriate qualification within the 30 month time limit proposed in CP10/12.
Also where an advisers has failed to comply with a Statement of Principle in carrying out their controlled function, or once been deemed competent, performed an activity outside their area of competence without appropriate supervision.
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