Insurance advisers operating as RFAs are being told they will need to have some qualifications to operate in the new advice environment – and whether that’s level 5 or a degree-level will depend on what they offer.
The Code Working Group developing the new code of conduct for advisers has revealed its proposals, which include setting competency standards.
Those offering product advice will need to be competent to a Level 5 qualification, and those doing financial planning will need degree-level competency. If they do not prove their competency by holding such a qualification, they will need to be able to clearly show why not.
AFAs are deemed to have met the standard but RFAs have not.
Insurance advisers will need to reach the degree level if what they offer falls is considered a financial plan, which includes insurance planning.
Chairman Angus Dale-Jones said the working group had opted for that definition because it expects the Financial Services Legislation Amendment Bill to be altered to remove its reference to advisers offering an “investment plan” and replace it with a “financial plan”.
The bill had taken away all other product-based distinctions and it was reasonable to expect it would amend that last example, he said.
To count as a financial plan, an adviser would offer to draft a plan and set goals, which the elements of the plan would combine to achieve.
“It’s not just selling a product but a fuller conversation with the client to understand what the client wants to do, with the recommendation of several different products to get whether the client is going.”
That required a higher level of competence than simply a level five qualification was able to deliver.
Advisers who had operated as an AFA were seen to have met the standards for financial planning or product advice, he said, because they had operated in a regulated environment with CPD requirements.
“It’s different with RFAs, even RFAs with many years of experience. We need a fair, measurable, quantifiable, way of being able to distinguish between people whose experience is good and peoples whose experience is not good. We don’t know what those are yet and part of the consultation is looking for an answer.”
A level six certificate has been floated as a possible stepping stone.
- Susan Edmunds, Good Returns
