FSA confirms 30-month rule for ‘most’ RDR activities

Following repeated requests from a number of advisers, the Financial Services Authority has confirmed that the 30-month rule that gives advisers a period of grace to attain the necessary qualifications will apply to “most but not all RDR activities”.

For most investment activities, a retail investment adviser must attain an appropriate qualification within 30 months of starting to advise if they are working under supervision, the regulator said. The rule does not apply to existing advisers.

In its latest Retail Distribution Review newsletter, the FSA said that the 30-month rule does not apply to advisers who intend to both advise on and deal in securities and derivatives, saying intermediaries must complete all of the modules of their qualification in these areas.

For all other activities, the 30-month time limit starts when the trainee starts the relevant activity and is working under supervision, the watchdog said.

The regulator said this follows queries from firms wanting to know how the 30-month rule applies to the RDR requirements. It added that it believes the 30-month rule will only impact a small number of individuals.

In the newsletter the FSA also reminded product providers that if they are offering facilitated adviser charging under the RDR they “should consider” how the regulator’s client money rules (Cass) will apply to the proposition and potentially seek legal advice.

Firms that previously offered commission and that are offering to facilitate adviser charges need to be aware that they are now holding money on behalf of clients and that they are responsible until money is received by the adviser, the FSA said.

In general, the regulator said firms will need to understand the application of Cass to all elements of their business, how they discharge their fiduciary duty to clients, and the limited circumstances in which third parties can hold client money on their behalf.

The FSA said: “Client money can be a complex issue, and firms facilitating adviser charging may find it beneficial to take legal advice on the matter.”