01May

Coronavirus has resulted in some tough times for many firms, but advisory firms may be cheered by two announcements from the Financial Conduct Authority. The regulator has agreed that, due to the health emergency, firms can have extra time to ensure their trainee advisers obtain a professional qualification, and they also have additional time before needing to implement certain new rules relating to pension advice.

The relevant rule in the TC section of the Handbook says:

“A firm must ensure that the employee attains an appropriate qualification within 48 months of starting to carry on that activity.”

However, the FCA recognises that it would be impossible to enforce this given that professional qualification providers are cancelling Diploma examinations because of coronavirus with no specific arrangements in place to reschedule them. Instead, up until October 31 2020, the FCA intends to apply an amended version of the above rule, so that where it reads “48 months”, in practice what it will really mean is “48 months or, where necessary, as soon as reasonably practicable afterwards, up to a further 12 months”.

Firms should note, however, that they still have a responsibility to ensure that the trainee advisers whose examinations have been delayed possess the skills, knowledge and expertise needed to discharge their responsibilities.

The new rules that require pension transfer specialists (PTSs) to obtain the same qualification as an investment adviser, alongside the existing PTS qualification, were due to come into force on October 1 2020. However, this requirement has now been delayed by 12 months.

Other new rules relating to pension transfer advice will now be introduced on February 1 2021, instead of August 1 2020. These include:

  • The requirement to provide ‘investment pathways’ for any customers of a firm that choose to enter drawdown without taking advice
  • The need to ensure that customers entering drawdown only invest in cash if they make an active decision to do so
  • The requirement to send annual information on all the costs and charges paid over the previous year to any customers who have accessed their pension
  • Various rules for investments platforms that are designed to make it easier for customers to move from one platform to another without liquidating their assets

The information shown in this article was correct at the time of publication. Articles are not routinely reviewed and as such are not updated. Please be aware the facts, circumstances or legal position may change after publication of the article