Policy Statement 11/1: Delivering the RDR - Professionalism
On 20 January 2011, the Financial Services Authority (FSA) published Policy Statement 11/1 - Delivering the RDR - Professionalism which includes the final policy and rules to raise professional standards.
In the FSA's Policy Statement 11/1, it outlines the role of new Accrediting Bodies, the necessity for advisers to obtain a Statement of Professional Standing (SPS) and certain qualifications and any appropriate qualification gap fill. The policy statement also outlines a more rigorous approach to ongoing Continuous Professional Development (CPD) and how firms will need to deliver quarterly reports to the FSA on their advisers meeting these new requirements.>
How does an organisation become an accredited body?
From 31 December 2012, advisers (both independent and restricted) will need to evidence that they are subscribing to professional standards by obtaining a Statement of Professional Standing (SPS).
A SPS can only be issued by a body accredited by the FSA. To be awarded this status and become accredited, an organisation would need to satisfy requirements in 4 broad areas:
- to act in the public interest and further the development of the profession;
- to carry out effective verification services;
- to have appropriate systems and controls in place and provide evidence to the FSA of continuing effectiveness; and
- to cooperate with the FSA on an ongoing basis.
What is a Statement of Professional Standing (SPS) and Annual Declarations
From 31 December 2012, firms must obtain, in respect of their competent advisers, a SPS from an accredited body that confirms that they have an appropriate qualification (including any necessary gap fill activity) and are complying with the minimum continuing professional development (CPD) requirements on an annual basis.
Additionally, they must obtain from each of their advisers an annual statement in which the adviser confirms that they have complied with the provisions within the Approved Persons handbook and the annual CPD requirements.
What will be the qualification requirements?
Where advisers have already achieved this level of qualification prior to 30 December 2012, they will not need to complete any further exams provided they undertake any appropriate gap fill activity.
Advisers who were deemed competent as at 30 June 2009 will need to achieve the appropriate qualification at level 4 before they can carry out the activity of a retail investment adviser after 30 December 2012.
A full list of appropriate qualifications has been produced by the FSA.
The FSA has produced guidance around the areas that advisers should look at and how they will evidence their activity in order that any gap fill requirements can be verified.
What will be the annual CPD requirements from 31st December 2012?
With effect from 31st December 2012, competent advisers will need to complete a minimum of 35 hours CPD in a 12 month period, of which, no less than 21 hours should consist of structured activities.
- Examples of structured CPD would be participating in courses, seminars, lectures, conferences or e-learning that require at least 30 minutes contribution
- Examples of unstructured CPD would be reading industry material or conducting research
All CPD needs to be relevant to the role, maintain their skills and knowledge and have written learning objectives and documented outcome. Appropriate records need to be maintained by the firm of CPD completed.
CPD requirements can be suspended in the event of the adviser being continuously absent due to circumstances such as maternity/paternity leave, long term illness or caring for a family member.
What are the supervision and reporting requirements?
A new section of the Training & Competence section of the FSA handbook will come into effect on the 31 December 2012 which outlines the requirement for a firm with advisers to report to the FSA on professional standards data.
The new report would need to be sent to the FSA quarterly (within business 20 days of the end of each calendar quarter) and must contain:
- The firm's name and FSA reference number;
- The names and individual reference number of each adviser (including trainees)
- Whether each adviser has attained the appropriate qualification;
- If an appropriate qualification has not been achieved, the date which the adviser commenced activities; and
- The name of the accredited body being used
The report needs to be submitted in a prescribed format as specified by the FSA. (There is no need to submit this report if there are no changes from the previous report.)
Additionally, with effect from 1 July 2011 a firm must notify the FSA, as soon as reasonably practicable, after it becomes aware of a significant event occurring relating to its advisers.
Examples of significant events are:
- An adviser who has been assessed as competent is no longer considered competent;
- An adviser has not achieved an appropriate qualification within the time period (30 months)
- An adviser who has failed to comply with the statements of principle outlined in the Approved Persons section of the FSA handbook; and
- An adviser who has performed a regulated activity before being deemed competent and without appropriate supervision
