The CISI has been vocal in its opposition to the FCA’s retrograde step in abolishing its heavily used Register of Approved Persons for no obvious sector or consumer benefit.
The decision to abolish the register followed criticism of the Approved Persons Regime by the Treasury Select Committee, which seemed to be very much a case of throwing out the proverbial baby with the bath water.
So, we applaud the FCA’s decision to rethink its original plans and to consult (CP18/19: Introducing the Directory) on a proposed, new, upgraded, more interactive register, now called a Directory which will, in its words, “empower the consumer”. However, we are concerned that the FCA will fall short of its laudable goal by failing to include key and relevant information about an individual, such as the person’s membership and standing within their professional body and whether they possess a valid Statement of Professional Standing (SPS), which is required for advisers in the retail market if they wish to provide advice to customers.
One of the major changes to the financial advice professions arising from the Retail Distribution Review is the significant role assigned to professional bodies in the establishment and testing of the mandatory qualifications required to be held by retail financial advisers. This has led to the professional bodies issuing around 30,000 SPSs annually and forms a major part of the FCA’s consumer protection strategy.
As the SPS is technically issued by an FCA-approved professional body, the regulator is able to argue that they do not approve, or authorise, retail advisers, but that they are instead “assessed” by an authorised firm as fit and proper or otherwise suitable and those who have an appropriate qualification.
Details about professional body membership, and whether the individual is an SPS holder, is materially relevant information
The FCA is asking for comments on Consultation Paper CP18/19.
If you value your CISI membership and want your commitment to professionalism to be recognised in the Directory, send your comments via a form on the FCA website by 5 October 2018.
Or in writing to:
Peter Curtis
Financial Conduct Authority
12 Endeavour Square
London
E20 1JN
020 7066 2516
Email cp18-19@fca.org.uk
Therefore, given the central part played by professional bodies in this regime, recognised by the FCA, it is both surprising and disappointing that it is not, currently, proposing for the Directory to carry any information about an individual's standing within their professional body, nor whether the individual holds an SPS and dates of its validity. These are two serious omissions.
Being awarded membership of a Chartered professional body is a major achievement that signifies that the individual has high levels of knowledge, skills and integrity and clearly differentiates them from those who are not members. Similarly, it is a requirement for retail financial advisers to hold an SPS. Therefore, when the public is choosing an adviser, these are important factors.
We agree with the FCA that the primary focus of the Directory should be on providing significant relevant information, in a format that can be easily understood, for the average search by a member of the public, who may be uninformed in the finer distinctions of different types of activity and regulation within retail financial services. Details about professional body membership, and whether the individual is an SPS holder, is materially relevant information.
Before the FCA issued its latest consultation proposal, we surveyed our member firms on the information which they felt it was important to carry on the register. Ninety per cent of the firms surveyed felt that information about whether individuals hold an SPS and their professional body membership should be included in any proposed Directory.
The FCA has said that “Professional bodies and trade bodies have an important role to play in strengthening professionalism amongst their members” and “Where they issue Statements of Professional Standing, we already expect accredited bodies to act in the public interest. They should work to raise consumer confidence and professional standards in retail investment advice and promote the profession.”
This is exactly what professional bodies are doing, so now is the time for the FCA to join up its thinking, grab the opportunity and ensure that it includes SPS validity and the professional body standing of members as designated fields in the new Directory.