The Retail Distribution Review (RDR)

The RDR has proposed the introduction of new minimum qualification requirements for financial advisers to improve their professionalism, and build on their existing Level 3 qualifications by completing an accredited Level 4 qualification. It is believed that this new qualification (equivalent to the first year of a degree) will see professional standards being raised within the industry.

Timetable 

November 2008

FSA releases feedback statement outlining a blueprint that is subject to industry feedback

February 2009

The ifs School of Finance diploma for financial advisers has receivedLevel 4 accreditation, however questions remain about the knowledge base requirement of the level.

The Diploma can be completed in as little as six months by advisers, compared to two to three years for the CII's Diploma. The shorter timespan, combined with the high coursework element in the ifs Diploma has sparked some criticism within the industry that it is a 'fast track option.'

June 2009 

Publication of the FSA’s latest RDR update:-
• The Level 4 qualification requirements will apply to both independent and restricted advisers.
• A new qualification will be developed by the FSSC. The new qualification will include core subjects:
 Regulation and ethics;
 Personal taxation;
Investment and risk. It will include application of knowledge together with subjects relevant to the particular market in which an adviser works.
• Grandfathering has been ruled out
• The FSA is consulting on a work based alternative to written exams for advisers authorised as at 30 June 2009. (The option being withdrawn at the end of 2012). This alternative is likely to be primarily an oral exam testing the same level of knowledge, carried out by examining bodies using independent assessors.
• The“no-regrets” policy  has been reconfirmed and existing advisers are encouraged to take a current Level 4 qualification now and fill any gap fill between this and the new qualification with CPD 

August 2009

FSSC consultation for 3 months from mid August to be completed by 2010. A new benchmark qualification for all advisers is to be developed.

November 2009

A new RDR consultation paper is set to be published in December with the FSA warning advisers who think the RDR ‘might go away’ that this is just ‘wishful thinking.’
In a recent speech in London, the FSA’s Director of the Conduct Policy Division, Sheila Nicoll, said she was disappointed that there were still those in the industry in denial and reinforced that the regulator is committed to improving market practices.
“We remain committed and resolute in addressing the problems we see persisting in the market and in our approach to dealing with them,” Nicoll said.
She also added that the FSA remains fully committed to raising qualification standards to level 4.
She stated that existing advisers who do not already meet the new standards should be getting on with their studies and those with existing qualifications should be thinking about topping up their CPD.
There were also words of caution for those who believe they may successfully challenge the FSA’s ability to raise qualification levels.
“We are entitled to remove an individual’s licence to trade if we deem them not to be competent.”


January 2010
What will new qualification standards mean for existing and new advisers?
Following the FSA’s consultation paper CP09/31 published in December together with subsequent points from the regulator, this is a summary of some key points in respect of qualifications.


Existing advisers

The regulator proposed a change to the definition of an “existing adviser” to a person deemed competent on 30 June 2009 as opposed to the end of 2010.
“Existing' advisers will need to achieve the Level 4 requirements by the end of 2012 deadline but those falling outside the definition will be given longer.
Anyone with current QCF level 4 qualifications will benefit from the FSA’s ”no regrets policy” with all current Level 4 qualifications counting.
CPD will be required to top up the gap between the current Level 4 qualifications and the new Level 4 standards. However, the regulator insists that CPD will have to be structured. The FSA will allow past relevant CPD to apply in meeting any gaps. Structured CPD should demonstrate the learning outcome that was covered, the assessment methods utilised, the results and who has carried out the assessment.

New advisers

The FSA confirmed that advisers who are not classified as competent until after July 1, 2009 will face a deadline to achieve the required standards that is later than the 2012 cut-off point.
Further consultation will take place in 2010 on what the “back-stop” deadline(s) will be.

Alternative assessments

The FSA also confirmed that exam and oral assessments are too restrictive. Other assessment methods will be allowed but the regulator insists these should meet the requirements of the relevant qualifications regulator at the appropriate level in terms of content, standards achieved and rigorousness of the assessment process-they will not be an easy option!

March 2010
CII Diploma pass rates
The number of candidates who passed during the year divided by the number who sat the exam.
Exam 2009 2008 2007
J05      54% 54% 60%
J01      54% 53% 53%
J08      53%  n/a   n/a
J02      51% 43% 51%
J04      44% 46% 55%
J07      43% 42% 45%
J06      40% 37% 43%
J03      26% 40% 45%
Ave      45% 45% 50%
The message from these rates is crystal clear, in order to pass you need to be extremely well prepared.


April 2010
The Diploma in Regulated Financial Planning, due to be launched in June, has been set at QCF Level 4 and caters for both new and existing advisers.

Its 6 module structure broadly mirrors that of the CII's existing Diploma in Financial Planning.

Advisers part-way through the current diploma can choose to complete their qualification by picking up outstanding credits from units within the new qualification.

The CII says the advantages of switching to the new qualification include the fact advisers can sit exams between Monday & Friday at test centres nationwide, and receive their results within 24 hours.

Only the financial planning unit will be a traditional written assessment.

Getting same-day results means advisers could re-sit an exam within a week if they fail, and every week thereafter until they pass.

New entrants would be required to sit 10 hours of exams on six units to pass the Diploma in Regulated Financial Planning. But this could fall to as few as four units for existing advisers, depending on the modules they have already passed.

June 2010. 

The new Diploma in Regulated Financial Planning is launched with the following modules:

End of 2012

All Advisers to have attained Level 4 qualification

2013

 Firms to submit reports to FSA based on 2012 data