How will it work in practice?
The SPS is evidence that the individual adviser subscribes to professional standards. This does not remove the obligation on the advisers firm to assess competency for the purposes of the requirements in the FSA Handbook. This distinction will be clearly set out in the SPS.
Customers and Firms will be referred to the Register if they want to check that the FCA/FSA have approved the person. Only the FCA/FSA can remove the adviser’s status as an approved person.
Firms need an SPS for all of their competent individual advisers whether they are offering independent or restricted advice. For example, this will therefore be a requirement for Banks, Wealth Managers, IFAs and Stockbrokers. The FCA/FSA expect an adviser will only hold one SPS from one accredited body, even if they choose to be a member of more than one accredited body.
We recommend the IFS School of Finance as the accredited body for two reasons;
- We have dealt with the organisation for over 7 years and have found them to deliver professional qualifications and services at a cost that is affordable.
- The costs attributed to their SPS service are likely to be much lower than any of their competitors, whilst still providing the highest quality program.
Please note that the individual advisor has the right to choose the accredited body that they feel will be the best one for their needs. A Principal Firm cannot insist that any of its advisers use one body in particular, though they can make recommendations based upon their own research.
Issuing or removing an SPS
To clarify the process around the issuing and potential removal of the SPS, and the roles and responsibilities of those involved, the FSA/FCA make the following points:
- If the SPS is removed by the accredited body, or the accredited body does not intend to issue an SPS, the accredited body must notify the adviser and the FSA/FCA in a reasonable timeframe.
- The FSA/FCA will examine why the accredited body has made this decision and determine the need for action. In practice this will depend on the individual circumstances of the case. Several options might be available to the FSA/FCA. They may;
- check that action has been taken by the firm or accredited body
- agree to an action plan that the adviser should undertake before their SPS is reinstated
- levy a fine on the adviser
- suspend the adviser for a period
- or decide to remove their approved person status
- In some instances, issues identified with individual advisers may suggest broader issues at their Firm. Here we can see that there is a greater responsibility on the individual adviser and their responsibility as an approved person to maintain the SPS. However in this case the FSA/FCA would address their concerns to the person responsible for competence at the Firm. Clearly there could be a knock on effect at the Principal Firm for failure to provide oversight for SPS activity.
- Unless the FSA/FCA decides that the approved person’s status is to be removed it is anticipated that the adviser will, once any development activity is completed to the satisfaction of the Fir, and the accredited body, be able to re-instate their SPS with their accredited body. They may also decide to attain a new SPS from another accredited body.
- The accredited body owns the SPS and would be able to ask for it to be returned, where it has been issued as a physical document. An SPS may also be issued as an electronic confirmation, as long as it is still in a durable form.
Administration of this SPS process
New Leaf has been central to the implementation and training of over 400 advisers in relation to DipFA. We have built a robust back office administration centre to cope with the demands this brings. This, along with our IT back office development, puts us in a strong position to take on the responsibilities of administrating the SPS on behalf of Principal Firms. We propose to:
- fully administer the process for all advisers to obtain their SPS from September 2012
- we will register each advisor with their chosen accredited provider and then manage their attendance at on-going events that are relevant to their area of advice
- we will personalise all training and make recommendations as to the events that are most appropriate to them. Our goal will be to improve and enhance their knowledge either from a holistic perspective or from a specialist perspective, where necessary
- we will liaise with the accredited body on their behalf and provide the necessary proof of training when asked to do so
Principal Firms will make savings in terms of administration costs by using New Leaf as their preferred training provider, and of course their own internal training courses and personal study undertaken by the advisor will all go into the accreditation process.