.jpg)
The Financial Services Authority (FSA), in its Retail Distribution Review discussion paper, has acknowledged that it is searching for solutions that will enable the industry to deliver financial services and retain the public’s trust in the industry. The SII’s response is that the aim is admirable and there are already many examples of good practice in the industry which FSA can adopt.
Simon Culhane, Chief Executive of SII, said “FSA wants a universal solution across the industry and we support the central aim in ensuring that whether a consumer visits an IFA, a bancassurer or a private client investment manager, the customer has access to a service that is: appropriate to the individual’s needs and delivered efficiently, with transparency of pricing, by a practitioner who adheres to high standards of integrity and ethics.”
Ruth Martin, Managing Director of SII, added, “The Retail Investment Management industry - private client stockbrokers, private banks, wealth managers - is seeing significant growth in client numbers and assets under management because firms in this industry seek a long term relationship with their clients and place great emphasis on building and establishing trust. Their charging structure is generally on a transparent and agreed fee basis rather than by an undeclared and opaque commission structure.”
Ms Martin continued, “The best firms in the Industry generally recruit graduates with the intellectual ability to work in a complex, dynamic industry; provide a broad induction programme; require staff to gain appropriate higher level qualifications in addition to their benchmark qualification. These top companies do not stop at just ensuring their staff become competent, they ensure they remain up to date through the continuing professional development programme of a professional body and inculcate their staff with high standards of integrity.”
The SII is the main professional body for the Retail Investment Management sector (RIM) and has made a number of recommendations to the FSA including:
Supporting increased professionalism for advisers. SII welcomes FSA’s recognition that professional bodies have a role in making changes to the behaviour of advisers working in the retail sector. In addition to providing qualifications for the industry, professional bodies offer membership – which requires compliance with a code of ethics – and a programme of events that keep members up-to-date with changes in the industry.
The SII agrees that in order to raise the quality of service in the retail sector a Practising Certificate (PC) could be introduced which would involve the individual, the professional body and the firm. This would provide consumers with the reassurance that the individual possessed the necessary skills, knowledge and expertise and would act in accordance with an ethical code. The term “Practising Certificate” could become the common badge used by all professional bodies in the sector to identify advisers with a higher level of skill and competence.
SII notes that the culture of RIM firms is such that many firms require their advisory staff to take the senior level SII Diploma or Masters in Wealth Management in addition to an SII benchmark qualification. This is in the context of a strong culture of training and supervision in the RIM sector so that customers receive top professional advice for long term planning, in many cases spanning several generations.
SII favours increased cooperation between retail professional bodies and is already participating in a cross retail industry initiative.
