Adviser code not credible, critics claim

BY IMPOSING a strict training and competence regime on its membership from 1 October, the Personal Investment Authority (PIA) - the public's financial services watchdog - is convinced that, coupled with disclosure of commission and other charges, it has taken a big stride towards preventing the kind of abuses that led to more than half a million people with personal pensions becoming victims of bad investment advice or administrative bungling.

But many in the industry believe the PIA's Training & Competence Scheme Rules & Guidance (TCSRG) is just another costly layer of bureaucracy that will do little to improve what is already in place and even less to protect the public.

Furthermore, it is held that a significant change is taking place in the selling of financial products by small to medium-sized independent financial advisers, given the growing sophistication and complexity of such products. There is a rapidly widening belief that for some firms to be truly competent in the financial services arena, it will be necessary for them to concentrate on particular sector niches. Almost inevitably, this will require a higher level of specalised qualifications.

Bob Woods, of Leicester-based Mattioli Woods Pension Consultants, says the skills required by his advisers are "detailed understanding of pension legislation and regulation, complemented by a knowledge of the investment products suitable for pension fund investment".

Mattioli Woods' policy is to employ people already having the APMI (Associate of the Pension Management Institute) qualification or, if not, to require them to pass the nine exams needed to achieve this professional qualification. The consultancy also carries out its own regular training sessions.

Mattioli Woods subcontracts all investment work to professional fund managers if the client's requirements or wishes involve any significant degree of investment risk - again taking the view that it is not possible to be a "jack-of-all-trades".

Mr Woods points out that the only professional qualification required by the PIA is the Financial Planning Certificate (FPC), which "involves three relatively short courses, designed to encompass almost every aspect of the financial services business, and only three exams - the first two of which are largely based on multiple-choice questions. The FPC is therefore superficial and largely inappropriate to those organisations operating in a niche market."

He says: "The industry continues to lack a truly credible professional qualification of the same status as the PMI, let alone the chartered accountant's or lawyer's equivalent. Professional qualifications of a high standard and specific to the financial product being offered must be introduced.

"I do not believe that any individual can truly be expert in all four principal areas - pensions, insurance, mortgages and investment. And yet this is apparently what our regulators would have the public believe."

A similar argument is put forward by Frank Eve, sales and marketing director of the Dorking-based Mortgage Trust, now part of the First National Building Society of Dublin.

He says: "The sheer complexity of today's mortgage market means that most borrowers lack the knowledge or experience to make a decision with much confidence when faced with such a wide array of mortgage offers. They need specialist help and guidance, and they need it from mortgage professionals whose integrity and ability has been throughly checked and tested."

Principals in the financial services industry tend to have far more resources than the IFAs and to do their training in-house. National Westminster Bank and the Prudential argue that it would be difficult to better their in-house training and competence operations.

The vast majority of NatWest's advisers are recruited internally. Each trainee undergoes a programme that normally requires six months to achieve threshold competence. During this period the trainees study for a variety of core and product knowledge tests. Once these have been passed, their overall level of competence and compliance is formally assessed in supervised interviews.

From 1 October, NatWest expects this training programme to include a requirement to pass FPC. As part of its ongoing training strategy, NatWest will be reviewing this assessment programme to ensure it meets the requirements of the TCSRG.

However, it has no plans to contract out any part of its training programme or to rely on a basic national standard.

The Prudential is equally proud of its training and competence scheme, on which it spends more than £15m a year in sending 2,000 of its staff through its purpose-built National Sales Training Centre (NSTC) at Newport Pagnell, Buckinghamshire.

Karen Watts, Prudential's spokeswoman, says: "Our rigorous training, knowledge and competence standards include a core curriculum covering knowledge of products and skills, structured on-the-job and continuous training, assessment and supervisory requirements."

In March last year, Norwich Union shook the industry when it decided temporarily to suspend 600 of its direct sales force so they could be retrained and tested to a much higher standard than that which prevailed.

The new training programme is divided into three key areas with externally accredited testing for each one. The chartered accountants, Ernst Young, and the sector regulator, Lautro, act as independent quality controllers. However, the qualifications and training remain essentially in-house programmes.

Richard Mathers, Norwich's training and development manager, says: "We moved from a commission-only basis to a salaried sales force with a much higher ratio of managers to direct sales representatives: originally one to 15, now one to 8.

"We have also halved the size of the operation from the original 600 to 300 company representatives, including those of appointed brokers."

Start your day with The Independent, sign up for daily news emails
New Articles
tvDownton Abbey Christmas special
Arts and Entertainment
Wolf (Nathan McMullen), Ian (Dan Starky), The Doctor (Peter Capaldi), Clara (Jenna Coleman), Santa Claus (Nick Frost) in the Doctor Who Christmas Special (BBC/Photographer: David Venni)
tvOur review of the Doctor Who Christmas Special
News
peopleIt seems you can't silence Katie Hopkins, even on Christmas Day...
News
news
PROMOTED VIDEO
News
i100
Arts and Entertainment
Left to right: Stanley Tucci, Sophie Grabol and Christopher Eccleston in ‘Fortitude’
tvSo Sky Atlantic arrived in Iceland to film their new and supposedly snow-bound series 'Fortitude'...
Arts and Entertainment
Jenna Coleman as Clara Oswald in the Doctor Who Christmas special
tvForget the rumours that Clara Oswald would be quitting the Tardis
Arts and Entertainment
Japanese artist Megumi Igarashi showing a small mascot shaped like a vagina
art
News
The Queen delivers her Christmas message
newsTwitter reacts to Her Majesty's Christmas Message
Arts and Entertainment
tv
Life and Style
fashion
ebooks
ebooksA year of political gossip, levity and intrigue from the sharpest pen in Westminster
Latest stories from i100
Have you tried new the Independent Digital Edition apps?
Independent Dating
and  

By clicking 'Search' you
are agreeing to our
Terms of Use.

iJobs Job Widget
iJobs Money & Business

Selby Jennings: Oil Operations

Highly Competitive: Selby Jennings: Our client, a leading European Oil trading...

The Jenrick Group: Night Shift Operations Manager

£43500 per annum + pension + holidays: The Jenrick Group: Night Shift Operatio...

SThree: Trainee Recruitment Consultant - LONDON

£20000 - £25000 per annum + OTE £40,000 + Car + Pension: SThree: SThree are a ...

SThree: Trainee Recruitment Consultant

£20000 - £25000 per annum + OTE £35K: SThree: We consistently strive to be the...

Day In a Page

A Christmas without hope: Fears grow in Gaza that the conflict with Israel will soon reignite

Christmas without hope

Gaza fears grow that conflict with Israel will soon reignite
After 150 years, you can finally visit the grisliest museum in the country

The 'Black Museum'

After 150 years, you can finally visit Britain's grisliest museum
No ho-ho-hos with Nick Frost's badass Santa

No ho-ho-hos with Nick Frost's badass Santa

Doctor Who Christmas Special TV review
Chilly Christmas: Swimmers take festive dip for charity

Chilly Christmas

Swimmers dive into freezing British waters for charity
Veterans' hostel 'overwhelmed by kindness' for festive dinner

Homeless Veterans appeal

In 2010, Sgt Gary Jamieson stepped on an IED in Afghanistan and lost his legs and an arm. He reveals what, and who, helped him to make a remarkable recovery
Isis in Iraq: Yazidi girls killing themselves to escape rape and imprisonment by militants

'Jilan killed herself in the bathroom. She cut her wrists and hanged herself'

Yazidi girls killing themselves to escape rape and imprisonment
Ed Balls interview: 'If I think about the deficit when I'm playing the piano, it all goes wrong'

Ed Balls interview

'If I think about the deficit when I'm playing the piano, it all goes wrong'
He's behind you, dude!

US stars in UK panto

From David Hasselhoff to Jerry Hall
Grace Dent's Christmas Quiz: What are you – a festive curmudgeon or top of the tree?

Grace Dent's Christmas Quiz

What are you – a festive curmudgeon or top of the tree?
Nasa planning to build cloud cities in airships above Venus

Nasa planning to build cloud cities in airships above Venus

Planet’s surface is inhospitable to humans but 30 miles above it is almost perfect
Surrounded by high-rise flats is a little house filled with Lebanon’s history - clocks, rifles, frogmen’s uniforms and colonial helmets

Clocks, rifles, swords, frogmen’s uniforms

Surrounded by high-rise flats is a little house filled with Lebanon’s history
Return to Gaza: Four months on, the wounds left by Israel's bombardment have not yet healed

Four months after the bombardment, Gaza’s wounds are yet to heal

Kim Sengupta is reunited with a man whose plight mirrors the suffering of the Palestinian people
Gastric surgery: Is it really the answer to the UK's obesity epidemic?

Is gastric surgery really the answer to the UK's obesity epidemic?

Critics argue that it’s crazy to operate on healthy people just to stop them eating
Homeless Veterans appeal: Christmas charity auction Part 2 - now LIVE

Homeless Veterans appeal: Christmas charity auction

Bid on original art, or trips of a lifetime to Africa or the 'Corrie' set, and help Homeless Veterans
Pantomime rings the changes to welcome autistic theatre-goers

Autism-friendly theatre

Pantomime leads the pack in quest to welcome all