He goes on to say: "The financial services sector is facing its worst crisis for 80 years. Public confidence in the sector, never really that high, has taken an almighty battering.
Now the UK consumer is being told, as part of the RDR review, that the regulators are determined to raise the bar in terms of professional behaviour of financial advisers.
To do this, the proposal is to put in place a structure that includes a standards board and a code of ethics. Educational achievement is to be raised a notch and advisers can now also potentially add a practising certificate (maybe even more than one) to the plethora of letters they can put behind their names simply by paying to belong to a variety of professional bodies.
The deeply cynical consumer cannot be blamed for suspending judgement. Meanwhile, the practitioners, already facing a torrid market, will be wondering how the not-insubstantial additional cost they will have to bear for this new edifice will make a jot of difference to their business.
For the issue is that professionalism, that concept of combining appropriate skills and knowledge with integrity for the benefit of the consumer, is not created through more layers of bureaucracy, codes, certificates and titles. It is a reputation that is built up over time and through example.
Nonetheless, we live in a world where form is so often triumphant over substance and so it was important to ensure that if such a structure was to be put in place it at least had to be seen to have some credibility. That is, it had to be free of all vested interests.
The ifs School of Finance was instrumental in ensuring that the putative standards board be independent. For any of this to have a jot of acceptability, the main driving force had to have statutory teeth (which only the FSA can give it) and its composition had to be made up of both industry and non-industry specialists, with the latter in the majority. The professional bodies are to be excluded.
This new Independent Professional Standards Board (IPSB) will, rightly, set the agenda. It will come up with an appropriate code of ethics and look to widening the information to be linked to the FSA's register on which any practitioner has to appear to demonstrate that she/he is authorised to practice.
The IPSB will also, and again rightly, work with the Financial Services Skills Council (FSSC) to ensure certain minimum standards of education are achieved by a practitioner. The argument is that this minimum should be at Level 4 of the QCA's qualifications framework. This is fine, providing Level 4 is a minimum and not an end in itself.
As an educational body, the ifs School of Finance is concerned to ensure that the learning is appropriate to the different tasks and activities in which the practitioner is involved. Public trust is fostered not just by knowledge, but also by the behavioural approach to providing that advice. Knowledge in itself does not guarantee appropriate or honest advice. A truism, perhaps, but needs restating in the face of old-fashioned out-of-touch attitudes towards learning and the generation of appropriate skills. Here the FSSC has a key role in making sure that what is being required to raise standards is actually fit for purpose.
The ifs School of Finance has for a very long time advocated that an initial qualification is simply the first rung on a very long ladder of learning. Thus it agrees with the demand for continuing professional development that goes beyond simple box-ticking. This is easier said than done, as most other professions where it is required will note. The ifs will commit to providing a CPD service of real value and at low cost.
The ifs School of Finance has never been enthusiastic about practising certificates. They are superfluous to requirements, a superficial trapping and an unnecessary cost, especially as the only ‘document' of relevance to the adviser is the FSA's register of authorised practitioners. The ifs is content that the IPSB decides what to do about these, and would be happy to see a sensible solution which leads to a print-out or certificate generated from the FSA's own register. That at least would have the merit of being cheap and credible.
The outcome of the working party on the nature of professionalism for practising advisers certainly provides grounds for optimism especially the given the independence that has been brought to the process. The consultation period will be instructive, particularly with regard to costs which, while addressed in the document, have not been derived from a full cost-benefit analysis. The real jury in all this will be the consumer, and that judgement will take a long time in coming notwithstanding the new edifice."
