Investment advisors to require Statement of Professional Standing

The FSA has announced that a Statement of Professional Standing will need to be held by retail investment advisers giving independent or restricted advice.

The FSA has announced that a Statement of Professional Standing (SPS) will need to be held by any retail investment advisers giving independent or restricted advice after January 2013.

However, in preparation for 2013, the first of the Professionalism rules will come into force in July 2011, and from this point firms will be obliged to notify the FSA if any adviser falls below the required standard of competence or ethical behaviour.

The statement will be designed to provide customers with evidence that the adviser subscribes to a code of ethics, is qualified, and has kept their knowledge up to date. It will also satisfy the criteria that the advisors act in the public interest; carry out effective verification services; have appropriate systems and controls in place and provide evidence of continuing effectiveness; and that they cooperate with the FSA on an ongoing basis.

There has been some doubt cast over the SPS, in particular from Aifa, with policy director Andrew Strange commenting: “Aifa supports the principles behind the proposed SPS for advisers but we doubt whether they will meet their stated objective to further increase customer confidence in the profession or whether the additional cost to advisers can be justified.” Aifa also argue that the statements will be difficult to police, given the number of accredited bodies that are expected to be set up.

However, Sheila Nicoll, the FSA’s director of conduct policy, said: “Rebuilding trust between customer and adviser is absolutely vital for the future prosperity of the retail investment market. When advisers open for business in January 2013, a Statement of Professional Standing will be a vital indicator for customers that the person they are dealing with is subscribing to a code of ethics, has up-to-date knowledge, and is appropriately qualified.”

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