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FSA: new rules on investment advisers

The Financial Services Authority (FSA) has confirmed that retail investment advisers will need to hold a Statement of Professional Standing (SPS) if they want to give independent or restricted advice after January 2013.

The statement will provide evidence that the adviser subscribes to a code of ethics, is qualified, and has kept their knowledge up to date.

It will be issued by FSA accredited bodies that satisfy the following criteria:

They act in the public interest and further the development of the profession.

They carry out effective verification services.

They have appropriate systems and controls in place and provide evidence to the the FSA of continuing effectiveness, and they co-operate with the FSA on an ongoing basis.

The regulator’s policy paper also sets out a requirement for investment advisers to complete at least 35 hours of Continuing Professional Development (CPD) each year, at least 21 hours of which must be structured.

This could involve courses, lectures, seminars or workshops but must focus on demonstrable change to improve advisers’ skills and knowledge.

According to FSA research, over 70% of advisers are already achieving this amount of CPD and when the Retail Distribution Review comes into force in January 2013, the Authority will start collecting information about individual advisers, such as the qualifications they hold and which accredited body they use.

However, the first of the Professionalism rules will come into force in July 2011, and from this point firms will be obliged to notify the FSA if any adviser falls below the required standard of competence or ethical behaviour.

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