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Regulatory oversight looms over hiring process

This article is part of
Guide to hiring and keeping top advisers

Regulatory oversight looms over hiring process

Financial Conduct Authority rules have made it mandatory for advisers to hold specific qualifications and accreditations.

Even before the Retail Distribution Review (RDR) came into force on 1 January 2013, then regulator the Financial Services Authority were tasked with ensuring advisers were found to be fit and proper, acting in the best interests of their clients and representing positively the sector in which they worked.

Since the Retail Distribution Review, Derek Bradley, founder of financial advisory forum Panacea Adviser, warns those who are recruiting advisers should ensure all experienced candidates have met the requirements set out by the RDR.

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He explains: “All advisers must hold a statement of professional standing (SPS) issued by an accredited body, for example, while the Financial Conduct Authority (FCA) also lists a series of additional qualifications that an adviser may need to have, depending on their level of experience and area of expertise.

“The situation will of course be slightly different if an adviser business is hiring someone at a junior level, at which stage it may not have been possible for the employee to gain any FCA-approved professional qualifications.”


However, it is not just about making sure experienced advisers have accurate SPS documentation and proper qualifications - although as the recent case of a woman fined £110,000 by the FCA for faking her SPS for two years indicates, the regulator takes meeting these requirements seriously.

John Joe McGinley, founder of Glassagh Consulting, agrees with Mr Bradley that “innovative strategies are needed to replenish the stock” of advisers, particularly after the Retail Distribution Review.

However, Mr McGinley feels regulatory requirements have become a “minefield” for firms wanting to hire newcomers and experienced advisers.

He says: “There is a minefield of regulatory requirements for appointing a new adviser or even appointing an existing adviser to your firm.”

Mr McGinley pointed to the FCA’s guidelines for firms, which includes details on how to recruit, train and supervise staff.

The FCA provides a useful checklist on what firms must ensure when they are seeking to hire an individual. The checklist states firms must:

■ apply for FCA approved person status for their advisers.

■ check advisers for fitness and propriety.

■ ensure advisers are trained and competent.

■ have effective systems and controls to monitor advisers.

■ be responsible for quality of advice.

■ ensure their advisers have an SPS.

■ supply the FCA with professional standards data about their advisers.

■ notify the FCA in the event of serious competence and ethics issues.

■ operate discipline including notifying the FCA if an individual is dismissed.

The regulator’s guidelines highlight the importance of not only hiring the right person with the right qualifications, but also hiring in the right way, with regard to the Equalities Act and without the lure of incentives.