Class in recession

So now we know the FSA’s thinking. Its interim report on the RDR was clear that the industry should develop and implement an agreed common framework for professional standards and that the benchmark qualification for the advisory level should be the diploma in financial planning or an equivalent level 4 qualification.

The FSA also recognised that professionalism is not just about achieving higher minimum qualifications; importantly it is also about committing to high ethical standards and robust programmes of relevant CPD. It has also been very clear about the need for industry-led solutions to tackle the challenges ahead and providers, distributors, trade bodies and professional bodies have all been particularly active in suggesting potential ways forward – ever mindful of the needs of the consumer.

For our part, we have adopted a leadership approach. For example, we led on creating the Edinburgh Declaration with its aim of aligning the financial services industry’s professional bodies under an independent professional standards board – an innovative initiative to develop and build an industry consensus around raising standards and professionalism which has been welcomed by the FSA. It sets out a statement of principles covering the following areas:

• Simplifying the “alphabet soup” of qualifications and designations; to improve the public’s understanding and confidence in financial qualifications.

• Improving professional standards and ethics including creating a single independent professional standards board, to create, oversee and develop high standards ensuring consistency.

• Developing a higher qualification benchmark and a transition process to achieve this in an agreed timeframe.

We also seek to inform and guide the market and in recent months we have published a series of position papers seeking to champion professional standards and propose a framework for professionalism in the future. The papers address key issues relating to professionalism such as qualifications, conflicts of interest and the need for the transition for the market to take place over a realistic timeframe and with appropriate support for advisers in order for it to be as smooth as possible.

We have been delighted with the backing we have received in response to these papers from all parts of the market and we believe there now is a real consensus emerging around the need to raise professional standards in financial advice including both standards of knowledge and behaviour. This is evidenced by results from research that we conducted with Deloitte and Touche that showed 92 per cent of our members believe that the future prosperity of the industry depends on improving professional standards. This is particularly interesting because the IFAs that made up the vast majority of the respondents were drawing a direct link between what is good for the customer with what is good for business.