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Help the FCA to set the right standard

The Financial Conduct Authority (FCA) is reviewing the appropriate exam standards this year, which many will think is long overdue. This got me thinking about the maze of different standards in education and financial services: what they are, who develops and looks after them and, most importantly, what they can be used for.

Many sets of standards are developed to ensure conformity among a group of individuals or a membership body.

Going back in time, the Skills Councils and their predecessors developed and maintained national occupational standards. The idea behind NOS was sound, but they became too cumbersome and the development and approval process was too bureaucratic. The starting point was to describe a job role, break it down into job functions, and identify the necessary competences. The competences described what someone performing at the expected standard should be able to do. They included skills, knowledge and attitudes or behaviours. NOS were developed for a whole range of jobs from hairdressers to compliance professionals. They certainly had their uses for describing job roles, recruiting, performance management and professional development. One major use was to develop qualifications, many of which were used in apprenticeships.

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The new trailblazer apprenticeships are being developed in a very different way from their predecessors: so far there are schemes for mortgage advisers, IFA network administrators and paraplanners. Developed by employer steering groups, these describe what a competent individual needs to be able to do. There is a lot less red tape once they are approved. There needs to be some form of assessment at the end, but this can be a project rather than an examination.

Some standards relate to professional behaviour and, while these are not usually mandatory, they may be a condition of membership of a professional body or the right to use a designation. Then there are voluntary standards firms or individuals will adopt, as they believe they set themselves apart from others. I worked on the ISO standard for Personal Financial Planning at the turn of the century, which was groundbreaking because it was one of the first standards for people, rather than for products or processes. The ISO standard was followed by a British Standard for financial planning firms.

Any international or global standard, such as the ISO 22222, Certified Financial Planner CM Certification or European Financial Adviser, needs to address differences across territories and take account of how much of the job role is country-specific. For example, financial advisers in Germany cannot advise on personal taxation.

Professional bodies such as the Chartered Insurance Institute and the Chartered Institute for Securities and Investment have recognition for chartered firms and accredited financial planning firms. These are voluntary standards that describe best practice. There will usually be a register of recognised firms, so that consumers can search for them. There may be minimum qualification levels for the practising individuals, but the main purpose is to promote the profession and reassure customers about the service they can expect.