Retail Distribution Review

Written evidence submitted by the IFS School of Finance

The ifs School of Finance

The ifs is a registered charity incorporated by Royal Charter and has a remit to provide the financial services industry with a skilled and competent workforce and to provide financial education to UK consumers.

It is a leading provider of benchmark qualifications for those involved in the delivery of financial, mortgage and investment advice to consumers with almost 100,000 professionals having taken ifs regulatory qualifications in the last decade alone.

The ifs is the only financial education organisation that is able to award its own taught degrees, a status that reflects the quality of all its programmes.

Retail Distribution Review

In 2008 the Financial Services Authority (FSA) confirmed that new minimum qualification standards at level QCA (now QCF) level 4 would be introduced.

Those advisers who were not appropriately qualified were therefore fully aware that they had four years to obtain the necessary qualifications.

Most advisers have sought to obtain the necessary qualification level by taking our Diploma for Financial Advisers (DipFA) or the equivalent qualification from other awarding bodies.

Hector Sants correspondence to the Treasury Select Committee on 13 December 2010 highlighted that by March 2010 approximately 50% of advisers already held a relevant qualification and that a further 40% expected to have completed their studies by the 2012 deadline.

To add to the above statistics, the Committee may like to know that the vast majority of both ifs and CII members have already completed or commenced their studies for an FSA approved QCF level 4 qualification.

It is also worth highlighting that the average length of time taken to complete our DipFA is 10 months (from the date of registration to completion).

Independent research undertaken in March 2010 suggested that only 4% of advisers were steadfastly opposed to gaining the necessary qualifications. This figure very much chimes with our own experience.

This 4% may be considered a vociferous minority. They have forcefully expressed their views through the financial trade press and to their constituency MPs.

One of their key criticisms has been the relevance and value of taking exams.

Some qualifications appear to be heavily dependent on the acquisition of more and more technical knowledge, much of which may not be relevant. These exams also take a rather dry learning by rote approach. It is perhaps understandable if some advisers (especially advisers with many years experience) would prefer not to take such exams, hence our sympathy for those who have questioned their applicability in the real world of providing financial advice.

However, our DipFA qualification is very different as it has a considerable emphasis on practical application. For example, DipFA requires candidates giving advice based on a specimen fact find that is provided to candidates a fortnight before the examination – a feature highlighted in Hector Sants letter to the Treasury Select Committee last month.

Whether taking our more practical DipFA, an alternative examination or one of the alternative assessments that do not require an exam sitting, most financial advisers have quietly taken steps to attain the necessary level of qualification to meet FSA requirements.

This fact should not be lost on the Committee when they consider whether or not to take any further action on this issue.

January 2011