European threat to higher adviser qualifications

Regulatory plans to increase minimum qualifications for financial advisers and professional financial planners may be sunk by European legislation, according to the Association of Independent Financial Advisers (Aifa).

Aifa’s latest discussion paper on the Retail Distribution Review (RDR), published today, said such a move may threaten European Union competition law. It said: ‘MiFID (Markets in Financial Instruments Directive) does not state the need for mandatory qualifications.

‘The Financial Services Authority (FSA) has justified the retention of the current minimum benchmark qualifications in the new T&C sourcebook as a supervisory tool. How would the EU Commission view mandatory higher qualifications in the UK and if imposed, would they create an anti-competitive market for UK advisers?’

The FSA has suggested that top-level professional financial planners would have to pass examinations equivalent to the Institute of Financial Planning’s ‘Certified Financial Planner’ or Chartered Insurance Institute’s ‘Chartered Financial Planner’ exams

Meanwhile general financial advisers would be required to pass an exam equivalent to the Diploma in Financial Planning. The RDR suggests that advisers qualified to the current minimum level would only be able to practice as ‘primary advisers’.