Chartered Body Alliance responds to ESMA guidelines

by Lora Benson | Mar 06, 2017
JPEG MAIN

Statement by the Chartered Body Alliance:

The Chartered Body Alliance (the Alliance) notes the new ESMA guidelines which come into force from January 2018 and require most advisers to have ‘qualifications’. 

However, the ESMA guidance concerning the definition of a ‘qualification’ is broad and does not distinguish in value between a five-hour training course or a benchmark, examined, level 3 (or 4) qualification.

Members of the Alliance believe there is no comparison between an individual who has achieved a qualification awarded by a Chartered Body, and a non-examined training course.

The Chartered Body Alliance is committed to raising professional standards and recommend to firms that, in the public interest, they should ensure their staff have the highest levels of competence, best demonstrated by taking a formal benchmark qualification from a Chartered Professional body.

Detail:

The European regulator, ESMA, has revealed detailed requirements under MiFID II regarding the knowledge and competence of retail and wholesale investment advisers.

Although insurance companies are exempt from MiFID II, their asset management subsidiaries will be subject to them. The FCA already requires retail investment advisers to have qualifications under the RDR.  However, advisers to professional clients such as fund companies and pension funds now will be required to have 'qualifications'. 

This applies to the retail and wholesale market and therefore is the first-time qualifications have been mandatory for the wholesale market since qualifications were changed to advisory by the UK regulator in 2007.

'Qualifications' under the Guidelines are defined as examinations, training or tests and the FCA is proposing to leave it to firms to decide which of these routes to take and to judge the fitness and competence of their employees.

The Alliance fear that some firms may be tempted to take the easy route to justify this qualification requirement and may opt for the minimum requirement of a five-hour bespoke training course. 

Typically, a Level 3 qualification would require approximately 100 hours’ study, and knowledge would be tested and verified during an independent exam. 

The Alliance is encouraging the FCA to guide firms to appreciate that the Guidelines are intended to provide a step change in employees' knowledge, and that the training and test options to 'qualifications' should reach the same level i.e. Level 3 or Level 4 (the current standard for the retail advisory sector).

Whilst we understand that the FCA may not have the appetite or remit to do this, we see it as our duty, as the newly formed Chartered Body Alliance, to bring this new requirement to the attention of senior management in firms so that they have time to choose the best route to qualifications, and are not pushed into the easy training option because of the shortage of time.

This is timely because there is no ‘grandfathering’ and the ESMA Guidelines come into force on 3 January 2018. Commercial providers are already promoting training courses in place of examinations as an easier route to achieve the standard. The Alliance does not wish to see a “race to the bottom”.

ENDS

For further detail contact: 

Chartered Insurance Institute

Joe Tauriello, Media Relations Executive

Joe.tauriello@thepfs.org

Office: 020 7417 4765

Mobile: 07538 258285

 

Chartered Institute for Securities & Investment

Lora Benson, Head of Media

Lora.benson@cisi.org

Office: 020 7645 0662

Mobile: 07801 521034

 

Chartered Banker Institute

Matthew Ball, Head of Public Affairs, Policy & Communications

Matthew.ball@charteredbanker.com

Mobile: 07720 684226

 

Notes to Editors:

About the Chartered Insurance Institute (CII)

 

The CII is the largest professional body for the Insurance and Financial Planning professions, with 125,000 members located across 143 countries.

 

Our purpose is to build public trust in insurance.

 

We do this through the provision of insightful leadership, relevant learning, and an engaged membership.

 

Follow the CII on Twitter, where you will be kept up to date with latest press releases, media appearances and expert commentary: www.twitter.com/CIIGroup

 

 

About the Chartered Institute for Securities & Investment (CISI)

 

The CISI’s mission is to help members attain, maintain and develop their knowledge and skills and to promote the highest standards of ethics and integrity in the securities and investment industry.

 

Based in the City of London, the CISI is a global organisation with representative offices in financial centres such as Dublin, Singapore, Hong Kong, Manila, Dubai, Mumbai and Colombo.  We work in close cooperation with regulators, firms and other professional bodies worldwide and over 40,000 examinations were sat in 80 countries in the last twelve months. 

 

With 40,000 members in 116 countries the CISI is the professional body which sets examinations and offers qualifications for those working, or looking to establish a career in the financial planning, wealth management and capital markets industry.

 

 

About the Chartered Banker Institute

 

The Chartered Banker Institute (“the Institute”) is the oldest professional banking institute in the world. 

The Institute was founded in 1875, operates in all UK nations, and has a significant and growing international presence

 

The Institute has driven an agenda of ethical professionalism throughout its existence; promoting professional standards for bankers, providing professional qualifications for retail, commercial and private bankers in the UK and overseas, and offering professional membership to qualified individuals. The Institute currently has over 30,000 members.

 

Follow the Chartered Banker Institute on Twitter:  www.twitter.com/charteredbanker