21st December 2010

PanaceaIFA:t&c - Regulatory Update

The FSA have published the final rules for Competence & Ethics in Policy Statement 10/18.

This update provides an overview of the requirements, in particular:

• Competence requirements;
• Qualifications; and,
• Ethics

We will look at the imposition of a 30 month timescale for new advisers to obtain an appropriate qualification, the new qualification regime, the importance of CPD,
the senior management responsibility for the governance of the firm's T&C regime and the FSA's stance on ethics.

For many advisers there will be some work to do in order to maintain competence and the term 'gap-filling' will be in many IFA's vocabulary. For those feeling daunted by the enhanced T&C regime, the prospect of a gapyear may be more appealing!

However, over the next few weeks, the PanceaIFA T&C team will put together some further bulletins on how to start preparing for the increased focus on T&C.

Gap-year or Gap-fill?

For those new to a regulated activity 30 Months to get qualified. This will apply to trainee advisers undertaking regulated activities for the first time.

Under the enhanced T&C regime individuals will have 30 months to obtain an appropriate qualification, as prescribed by the FSA. We already know that this will be at level four (as opposed to level three currently). There can be an extension of up to 60 days where the regulated activity is not being carried out, or where someone needs extra time due to a disability.

The clock starts ticking from the point the trainee commences the regulated activity. Given that the FSA insist in most cases that a regulatory module is in place prior to commencement of regulated activities, it would seem to make sense to get the trainee to pass this first, prior to the 30 month clock ticking.

• Panacea T&C will enable the qualification path to be managed for any trainees.

Qualifications

Requirements & reviews

The FSA have now published the definitive list of exam requirements as well as where appropriate exams are already held, the gap-filling requirements. This undoubtedly will be picked up by the various exam bodies who no doubt will be publishing material suitable for use as gap-filling. The deadline for when advisers need to meet professionalism standards for RDR has not yet been published, however there is nothing to prevent advisers starting now.

• The Panacea T&C system will be ideal for prompting, recording and evidencing the 'gap-fill' activities.

The FSA have also undertaken to review examination standards every three years.

They will start with the standards linked to pension transfer specialists - this review will commence in early 2011. This is perhaps hardly suprising given the recent FSA criticism around pension switching.

The role of senior management in...

T&C Governance

As part of the approved persons regime, the APER section of the handbook will be amended to include senior management responsibility for ensuring staff maintain their competence and adhere to ethical standards.

To quote what will be the revised wording in the FSA APER handbook:

The appropriate approved person performing a significant influence function should take reasonable steps to satisfy himself, on reasonable grounds, that each area of the business for which he is responsible has in place appropriate policies and procedures for reviewing the competence, knowledge, skills and performance of each individual member of staff.

As ever, the challenge for senior management/business owners will be to demonstrate that they have the management information to evidence the above.

• Panacea T&C is the ideal platform to evidence the firm's adherence to both the current and new FSA T&C requirements.
• For a 30 day demo of the system follow the Panacea t&c:me link from the Home Page

WWW.PANACEAIFATANDC.CO.UK

RDR, FSA/FCA