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FSA considers RDR deadline extension requests

Of the close to 50 firms that have so far applied for an extension, the regulator has granted just 13.

By Marc Shoffman | Published Aug 15, 2012 | comments

Nearly 50 advisory firms have applied for waivers to allow individuals to have an extension to meeting the Retail Distribution Review qualification requirements after 1 January 2013.

A Freedom of Information Act request showed that, with less than five months until the RDR deadline, only 13 applications have so far been approved.

The data showed in 2010 there was one application that was then withdrawn by the firm. In 2011, there were 19, of which one was rejected, 11 were withdrawn and seven were granted. Up to the end of June 2012, there were 27 applications, of which one was rejected, seven were withdrawn and six were granted.

The figures showed that 13 are still under consideration.

2010

2011

2012

Applications received during each year

1

19

27

Applications granted                                         

0

7

6

Applications rejected by FSA                           

0

1

1

Applications withdrawn by firm                       

1

11

7

Applications still under consideration               0013

The authorised entity must apply for a modification, whether for health or other reasons. Applications cannot be accepted from individuals or from appointed representatives, the regulator said.

According to the FSA’s training and competence sourcebook, a modification can only be granted if certain tests are satisfied under section 148 of the Financial Services and Markets Act 2000.

The tests are whether not modifying the rule would make it “unduly burdensome” for the firm to comply or complying with the rule unmodified would not achieve the purpose it was intended for, and if the modification would not result in undue risk.

The FSA said that the advisory firm needs to provide “robust evidence” setting out how the statutory tests in section 148 are met.

Firms should demonstrate that exceptional circumstances exist that prevent, despite best efforts, an individual from completing an appropriate qualification or, where applicable, completing qualification gap-fill by the end 2012 and that the individual will not carry out the activity of a retail investment adviser during the period of the modification without appropriate supervision.

According to FSA rules, firms have to show evidence of “exceptional circumstances” such as a health issue with a medical opinion.

The business will have to show what the individual has achieved so far, how long they want an extension for and how they plan to meet the requirements.

The FSA said: “The FSA does not expect applications to be made because individuals have merely run out of time – extensions will usually only be available for those facing exceptional situations where the applicant can prove that they have already done everything possible to meet the requirements including exploring all other alternatives prior to applying.”

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