All financial advisers need a suitable Level 4 Diploma qualification if they are to advise on investments or pensions. However, simply passing the examination as a one-off and then using it as their ‘passport’ to give advice for the remainder of their career is not sufficient, and all financial advisers are also required to keep their knowledge up to date. It is also the responsibility of the firms they work for to ensure that advisers remain competent.
With this in mind, the Financial Conduct Authority (FCA) has announced that it has collaborated with the Chartered Insurance Institute (CII), and that the two bodies have jointly devised what is described as ‘a re-assessment test of the level 4 Diploma in Financial Planning’. This test will be known as the ‘Regulated Retail Investment Adviser Re-Evaluation’, and it will be launched on October 1 2018.
The FCA’s statement on this subject says:
“We believe that advisers having a good level of knowledge is the foundation to giving sound financial advice. This is particularly the case with the more technical aspects of financial advice.
“The level 4 Diploma became the standard when the Retail Distribution Review came into force at the start of 2013. Advisers complete a minimum of 35 hours continuous professional development each year with the aim of maintaining their knowledge. Not all firms test their advisers’ knowledge yearly as part of their Statement of Professional Standing, with many advisers never retesting.
“The objective of the re-evaluation is to identify areas of strength and weakness in technical knowledge and its application that underpins suitable financial advice.”
The CII’s test comprises 100 questions – 65 standard format and 35 multiple response questions – covering all areas of the CII’s Diploma in Regulated Financial Planning qualification.
Many advisers did of course obtain their Diploma from The London Institute of Banking and Finance (LIBF) (formerly the Institute of Financial Services), rather than from the CII. The LIBF has also announced that it is developing its own re-evaulation test and emphasises that the FCA has not entered into an exclusive agreement with the CII in this respect, so it is expected that the FCA will still recognise the LIBF’s re-evaluation test.
It should most certainly be noted that taking a re-evaluation examination is not a substitute for carrying out Continuing Professional Development (CPD). All advisers must still complete a minimum of 35 hours CPD per year, of which at least 21 hours must be ‘structured’ CPD. Examples of structured CPD activities include: courses, seminars, lectures, conferences, workshops, web-based seminars or e-learning. It is the responsibility of firms to ensure that their advisers carry out sufficient CPD, and that records are kept of this activity.
At present, use of the re-evaluation examination remains voluntary – the over-riding requirement is that firms must ensure their advisers can demonstrate continuing competence, by whatever means. However, the FCA adds that it may use the re-evaulation as a supervisory tool if it believes it is appropriate to ask specific firms to re-test specific advisers.
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