WIREDGOV

The Financial Services Authority (FSA) has today published proposals to strengthen its requirements on competence for individuals carrying out retail activities, while placing more emphasis on standards of ethical behaviour. 

Reflecting the FSA’s increased focus on competence, the proposals will introduce a 30 month deadline for individuals to complete all modules of a qualification required for their role. The proposals will also remove some transitional provisions which allow individuals to operate without formal qualifications, due to the arrangements under their previous regulator.

Further proposals clarify how individuals carrying out approved persons roles should demonstrate a good standard of ethical behaviour. They will be expected to act in the interests of their client, avoiding consumer detriment and taking responsibility for their own level of competence.

The proposals seek to increase standards of professionalism across the industry, complementing the Retail Distribution Review plans and rules that are already in place for investment advice.

Sheila Nicoll, FSA director of conduct policy said:

“Competence and ethics are key elements of our regulatory regime and we have increased our scrutiny of individuals working in the financial services industry over the last few years.

“Ultimately it is in a firm’s commercial interest to recruit, train and retain good quality individuals but regulation ensures that standards of competence and ethics are maintained at an appropriate level.

“We have designed these proposals to enhance consumer protection by strengthening our competence and approved persons requirements. We want to see firms operating robust training and competence schemes and individuals demonstrating good standards of ethical behaviour.”

Plans to publish lists of qualifications in the Handbook that meet FSA requirements will mean that firms and individuals will have an easily accessible and comprehensive source of approved qualifications.

NOTES FOR EDITORS

1. The consultation paper can be found on the FSA website. The consultation will close on 6 September 2010.
2. The FSA commissioned The Cattellyst Consultancy to carry out research to assess how firms had implemented the post-2007 competence regime and the issues they had faced. The research was conducted amongst 47 firms, market bodies, institutions and associations.
3. RDR professionalism proposals will be set out in the next RDR consultation paper due to be published in June 2010.
4. The FSA will plan a Training and Competence conference for 2011 if there is sufficient interest from the industry, to be followed with a series of seminars. Please visit www.fsa.gov.uk for more details.
5. The FSA regulates the financial services industry and has five objectives under the Financial Services and Markets Act 2000: maintaining market confidence; promoting public understanding of the financial system; securing the appropriate degree of protection for consumers; fighting financial crime; and contributing to the protection and enhancement of the stability of the UK financial system.