Following the FCA’s much anticipated and reported updates to the pension transfer industry, a considerable number of barriers have been thrown up.
Another significant industry challenge has seen professional indemnity (PI) cover become tricky, if not unobtainable for some.
There is a change to the way clients are charged and, from an educational standpoint, further continuing professional development (CPD) to enhance knowledge and advance the quality of advice for clients.
As an education specialist, I want to focus on the learning aspects of the changes.
These are useful for those in pension transfers who continue to offer advice, but also valuable for those who may work on the periphery and want to stay informed for their existing clients – as well as for potential new clients who may require a professional referral.
To be clear, according to the new rules, you now have to add 15 hours each year specifically on pension transfers to any other CPD that you do as a financial adviser. This must include:
- five hours from an independent source, and
- nine hours of structured CPD.
Alongside this, you will also have to complete a minimum of 35 hours of CPD each year for retail investment activities, of which 21 hours should be structured. If you also sell insurance, the 15 hours required by the Insurance Distribution Directive (IDD) can be included in that.
We could view this as another set of rules to be governed by and do the bare minimum. Over the years, I’ve heard a lot of complaints from advisers who see another layer of rules as just more bureaucracy. But CPD is not just about statutory requirements.
Many advisers recognise CPD as a means to enhance knowledge, prove their professionalism and advance their careers and their businesses.
In the last 30 years, we have experienced a huge number of additions to our processes. The advisers who have thrived have always embraced change and passed on what they have learned to their clients and peers.
Take for instance the humble IDD – a replacement for the ‘terms of business’ letter back in the day. (And yes, unfortunately I am old enough to remember when they were introduced).
In these documents, there are references to ombudsmen, regulators, complaints – all designed to protect the consumer but unfortunately often passed off as just stuff I am obliged to give you.
For the professional adviser, new processes are an opportunity to reinforce the link between consumer protection and the professionalism of the financial advice sector.
The same can be said for CPD, but, again, there are distinct differences between embracing it to get the most out of the learning and advancing customer outcomes, and doing it because the regulator makes us do it.
The area of advice covering pension transfers has evolved and is still a much-needed service, especially for some clients. To enhance what is done for these clients, pick the most relevant, up to date and meaningful CPD to ensure you attain the correct outcomes.