Press Release

CII responds to FSA's RDR consultation launch

25 June 2009

The Financial Services Authority's (FSA) Retail Distribution Review (RDR) Consultation Paper represents a major step to a more professional financial advice market, says the CII Group, whose membership includes more than 25,000 financial services professionals within the Personal Finance Society (PFS).

Trevor Matthews, President of the CII, said:

"The biggest challenge for the long term future of this industry is to restore confidence in financial services, which has been damaged in the public mind for too long. While the immediate journey will be tough in the current economic circumstances, the RDR gives all of us the opportunity to move to higher levels of competence and professionalism and to consolidate the major progress already made."

Dr Alexander Scott, CEO of the CII, said:

"While there is much to absorb in the FSA's consultation, the direction of travel for the professionalism strand of the proposal is clear. It's a green light to raising the level of qualifications and behaviour across the market to meet the original objective of the RDR to raise levels of public trust and confidence.

"I welcome the wider package of professionalism which the FSA intends to consult on. This includes all the things the CII has advocated in its position papers, including the proposal for a professional standards board, which we believe should be independent, to oversee the development of professional standards and act as a guardian of the public interest. We also welcome proposals for ethical standards, continuing professional development (CPD), and the FSA's proposal to look at an alternative assessment to exams, which must be as robust as the exams option.
"Even though the timeframe is ambitious and the required step-change in terms of the new benchmark will be exacting for some, I believe that this transition to an even more professional era can be achieved. We will play our part to support the market in getting there. The market is already demonstrating remarkable progress.

"We are seeing a huge uplift in numbers of advisers who are already well on the way to the new benchmark qualification consistent with the FSA's 'no regrets' policy. We estimate that half the market is either at the benchmark or en route through study. And in the past 18 months we have seen over 9,000 individuals book in for a Diploma exam for the first time.

"Ultimately the public will be the judge of whether these proposals will help rebuild trust and confidence in the market."

The CII has seen record numbers of sittings this April for its Diploma (level 4) exams. There have been over 14,000 bookings for CII Financial Planning Diploma modules in 2009, a 64% increase on the equivalent time last year.

While there are still concerns in the market place about an exodus of advisers, the CII\PFS membership survey conducted in association with Ernst and Young published earlier this month showed that only 12% were likely to exit the market in 2012. This is a much more optimistic projection than many commentators have been estimating and is consistent with the FSA's own cost-benefit analysis.

The CII believes the proposals set out by the FSA to raise the minimum qualifications benchmark to QCF Level 4 for all those giving investment advice represent a sensible benchmark. The CII has already set out a suggested blueprint for what the qualification might look like for new advisers from 2010 onwards2. The CII is pleased that those advisers who are already qualified at this level or are working towards it will be fully recognised in the post-RDR world.