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A qualification conundrum
While the FSA's former deputy chairman had no banking qualifications, IFAs will have to negotiate ever higher hurdles to satisfy the Retail Distribution Review's newest requirement. Lindsey White navigates the level four labyrinth
Yet the RDR's new requirements could have unintended consequences on the advice industry. IFAs who are skilled, honest and experienced, but unable to pass an exam will disappear from the market. In this case, all stakeholders could suffer - product providers will have fewer outlets, the government will have to compensate for less advice available with higher levels of consumer reliance on the state, and the consumer will have to turn elsewhere for advice.
Future changes
Even after the RDR, much of the qualifications landscape remains murky. Some previous qualifications count towards a diploma, while others are void, and many decisions about credit must be made on a case by case basis. In order to determine where they stand in terms of qualifications, IFAs should first decide which path they will take to level four, and then ascertain exactly how many credits their existing qualifications are worth. This information can be obtained by visiting the ifs (http://www.ifslearning.ac.uk/qualifications/courses/dipfa.cfm) or the CII (http://www.cii.co.uk/financialservices/qualifications/Qualification.aspx?award=DipFP) websites. Clearly, the system needs to develop further.
While there are mixed feelings about the new standard, IFAs, providers and consumers alike agree in their desire for clarity. To this end, the FSA has set up a working group to clarify level four standards. The regulator will meet to assess level four's progress in June 2009, but will not decide until 2010 what the exact benchmark will look like.
On a positive note for IFAs, the November RDR report says that credit will be awarded for any level four training undertaken while the FSA tries to sort out qualification details.
Higher qualifications can create more consumer confidence, which is desperately needed in the current climate of financial uncertainty. However, there are also certain risks to consider. With two routes to level four (through the CII and the ifs), and more examination bodies vying for recognition, there is a danger that the benefits of increased consumer confidence will be negated by the confusion surrounding the exam hierarchy. To truly raise consumer confidence, the FSA must act quickly and decisively to clarify the level four landscape.