A key piece of research used by the FSA to justify new professionalism standards is based on a decade-old study of fund managers, IFAonline has learned.
The FSA says the research, which was carried out in South Africa and based on data gathered between 1996 and 2002, offers proof of a link between higher qualifications and improved consumer outcomes.
Entitled ‘Are some fund managers better than others?', the study assessed the different types of qualification held by managers and how these impacted on the 57 funds they managed.
It suggests there is a small correlation between better fund performance and higher qualifications, but concludes 'other factors' are more important.
In a consultation paper on professionalism published in June last year, the FSA cited the findings as evidence of a positive link between professionalism and consumer outcomes.
At the time it referred to the study as 'unpublished internally-commissioned research'.
The FSA last week confirmed its final rules on professionalism. All UK advisers must hold a relevant QCF Level 4 qualification by 1 January 2013 or they will not be allowed to give advice. The current minimum qualification requirement is QCF Level 3.
Originally published in 2003 in the South African Journal of Business Management, the research assessed 57 funds from the MoneyMate database.
It was later reviewed by the Professional Associations Research Network (PARN), which concluded the study "cannot infer with certainty that professional qualification causes better performance".
It added: "The study was not designed to allow the inference of causality and the observed effect only explained a small percentage of overall fund performance meaning other factors, which were unaccounted for, have a stronger impact."
Furthermore, PARN found fault in the methodology used by the authors of the study, negating its relevance in proving the importance of qualifications.
It adds: "Because the analysis does not provide a randomly-assigned control group...we cannot infer with certainty that professional qualification causes better performance."
Introducing the research, PARN justifies its inclusion, even though it does not directly relate to financial advisers.
It says: "The funds and the managers considered in this research are within the financial sector, but their services and outputs are not advice based.
"However there are many similarities in the skills required of fund managers and those required of financial advisers, not least in terms of judging risk."
It was one of two studies mentioned by the FSA in its professionalism paper.
A similar survey conducted in 2003 by the Australian Securities and Investment Commission (ASIC) was also cited as providing evidence of a link between qualifications and client outcomes.
Professional Adviser and IFAonline have previously reported on the unanswered questions surrounding the ASIC study.
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