'Die is cast' on FSA exam for advisers as opponents give up fight

Published on Wednesday 27 May 2009 21:22

OPPONENTS of controversial "top-up" exams for investment advisers shortly to be introduced by the Financial Services Authority have thrown in the towel, The Scotsman has learned.

They have accepted defeat and believe the FSA will confirm in its Retail Distribution Review next month it is pressing ahead with the exams, designed to raise standards for those advising the public on retail investments.

The exams will apply across the board, from big financial firms specialising in private investors to one-man-band independent financial advisers (IFAs).

"This exam change is definitely going ahead," an influential City source said. "And most IFAs accept that. The RDR will just be about implementation.

"There has been an outcry from some senior IFAs because they consider it demeaning.

"We know quite a number of senior financial professionals who are still unhappy about it.

"Some others just don't have the intelligence or desire. Either way, though, the FSA was clearly not backing down on it."

The exams proposal emerged in the wake of a public outcry about standards of competence and ethics following the collapse of large sections of the financial sector last year.

But it has aroused controversy because it will force many senior executives to top up their qualifications if they want to sell or advise on retail investments.

An investment expert at one of Scotland's best-known financial companies said: "It is pretty clear now that the die is cast. The Retail Distribution Review will involve a rescrutiny of people's qualifications.

"But to ask someone in their late 50s or early 60s to retake an exam in this way is strange."

However, he added: "Practically, I suspect many of the bigger firms will engineer a postponement of such exams, and the (senior] individuals concerned will be allowed to retire with grace in due course."

An FSA spokesman confirmed that the idea was for the current QCA level 3 exam for financial advisers – which approximates to an A-level in England – to be replaced by a requirement to attain QCA level 4.

The spokesman said: "QCA level 4 is broadly equivalent to the first year of a degree."

The Association of Private Client Investment Managers and Stockbrokers (Apcims) said late last year there should be "alternative ways" for the FSA to judge the suitability of high-ranking executives to sell financial products. It said then some of its members found the idea of retaking exams "insulting".

The FSA said last autumn in its feedback statement on earlier consultation with the industry that it also aimed to establish an independent professional standards board. That will introduce a code of ethics for advisers to private investors.

A source said yesterday: "The code of ethics will recognise that behaviour is as important as ability. If that involves a shake-out of the bottom 10 per cent of IFAs no-one will be sorry."