Independent Standards Board would restore public trust

7 December 2009

The Chartered Insurance Institute (CII) believes that an independent professional standards board could be the key to restoring public confidence in financial services.

The latest CII paper in professionalism; 'Building trust through professionals standards: Our view on an Independent Professional Standards Board' looks at how an Independent Professional Standards board (IPSB) could be central to delivering and maintaining higher professional standards capable of commanding the public's trust. The paper is a contribution to the FSA's forthcoming consultation on the topic as part of the retail distribution review (RDR).

The CII believes that an IPSB should set standards for qualifications, continuing professional development (CPD), ethical behaviour; and disciplinary action against individual advisers who seriously transgress.

The proposed IPSB should comprise the following key characteristics:

• A single structure of professional standards for all
• Independent of existing regulation – from both the industry and the regulator
• Lay representation, drawing in members outside the financial services sector
• Retain a primary oversight function, without becoming an implementing body
• Guarantee standards and inspire consumer trust and confidence

The CII paper argues that initial opposition to the concept has focused on concerns on cost and clarity over regulation, neglecting the central objective of the RDR: the long term benefit to improving public trust and confidence.

Professional bodies already provide a strong infrastructure to deliver much of the existing and future activity envisaged by the FSA and many stakeholders. Research undertaken by the CII demonstrates strong evidence of support for the project: surveys show the public, parliamentarians, and practioners all believe it is important to have a standards body that commands public trust in its independence. [1]

Dr Sandy Scott, CII chief executive, said, "The RDR debate has seen considerable strides made by many in the industry to raise professional standards but the public, as yet, has not been an active participant in this debate. This is an opportunity for the public voice to be heard. We believe that a Professional Standards Board that is independent from the industry and the regulator could play a key part in boosting public confidence in the sector.

"The IPSB should ensure there is no arbitrage of standards across the diversity of the professional bodies and to preserve its independence, we would expect it to draw widely in its membership from outside the financial services sector."

Dr Scott warned, "Despite the considerable progress made by the industry toward building a profession there remains the danger of siren voices calling for a 'pick and mix' approach to professionalism. This progress will be undermined in the public's eyes if there is not wholehearted support for a robust package of improved professional standards that is similar to other professions.

"The IPSB shouldn't reinvent or duplicate existing arrangements. What it must do is operate cost effectively as both a guarantor of consistent standards and as an agent of demonstrable change - only this will inspire consumer confidence."

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