By the end of December 2012, those working as financial or investment advisers must meet new professional standards introduced by the Financial Services Authority (FSA), under its Retail Distribution Review (RDR).
With the aim of increasing professionalism and restoring confidence and trust in the sector, the compulsory new standards will have major implications for the development needs of advisers and their recruitment.
To help HR professionals understand the reasons behind the changes and the breadth of change taking place, we identify the key issues HR departments will face in meeting the requirements of the new standards - including the immediate need to review role specifications and the wording of job advertisements - and we provide recommendations on how best to address those issues.
New baseline qualifications
The FSA has developed a list of appropriate qualifications to meet the requirements of the new standards. The Chartered Institute of Bankers Diploma in Investment Planning is on this approved list, which can be found at http://www.fsa.gov.uk/smallfirms/your_firm_type/financial/pdf/rdr_quals.pdf.
HR teams are advised to check the qualifications held by potential candidates against this list and to do so on a regular basis, as the list will be reviewed regularly by the FSA.
It should be borne in mind that some of the routes to qualification are only available to those deemed 'existing advisers' as at 29 June 2009. Although this can be a complicated area to define, most employers have already established which employees qualify as advisers. However, should a candidate come forward with only a couple of years' experience, it is advisable to check that they don't follow the wrong qualification path.
For most HR teams working in this sector, contract templates will need to be reviewed and updated and it might be advisable to adopt a more general phrase in all communications about role requirements, such as 'holding an appropriate qualification', to allow for flexibility as the list of appropriate qualifications evolves. It is important to be careful not to dismiss new qualifications on the approved list just because they are unfamiliar - while it may be easier to 'stick with what you know', that point of reference may no longer be relevant and you could be missing a great candidate!
Gap Fill
This is now a term familiar to advisers. In short, some older qualifications that have made it onto the new FSA list will require the holder to look at the new standards and ensure they have undertaken some activity to address any gaps in their knowledge. Qualification-awarding bodies are helping advisers measure their existing knowledge against the new standards and supporting them with suitable learning for their gaps, where necessary. Although it is up to the individual advisers to address the skills gap issue, their HR departments will need to have processes in place to check and confirm that this work has been done, alongside the ability to establish where candidates are in this process during recruitment.
The Statement of Professional Standing (SPS)
From January 2013, all advisers must also hold a document from an FSA Accredited Body - eligible organisations are expected to be awarded this status in autumn/winter 2011. The SPS will ensure that advisers adhere to a code of conduct and keep their skills updated through structured professional development. To monitor this effectively, HR professionals will need to review the requirements for the SPS (http://www.fsa.gov.uk/smallfirms/your_firm_type/financial/pdf/FS055_rdr_pr.pdf ) now, to ensure a suitable policy is in place to confirm that terms and conditions of employment reflect the need to hold and maintain an SPS.
From July 2011, employers will also be required to report any adviser competence issues to the FSA, which will have to be stipulated clearly in advisers' terms and conditions of employment.
There is clearly much work to be done in the run-up to the regulatory changes and this should serve as a reminder to avoid last-minute calls on resources as the deadlines approach. You don't want to be last at the finish line come 2012!
Shona Matthews (pictured) is head of strategic Implementation for the Chartered Institute of Bankers.
