What the RDR means for the future of qualifications

Clearly the retail distribution review (RDR) will have an impact on new entrants to financial services, because the benchmark qualifications that they need to obtain will be more demanding. On the other hand, this also means new advisers will be better prepared for the complexities of their roles. 

We have recently seen with CP10/12 a proposed increase in the scope of the Training & Competence (T&C) regime, with the requirement that discretionary managers must hold an appropriate qualification – though not necessarily at level 4.

Although not an RDR consultation paper, this initiative shares with the RDR the perception by the regulator (itself reflecting public concern) that financial professionals must provide evidence, in the form of an examination certificate, of their competence.

So once level 4 qualifications are embedded within financial services, can we expect to see pressure to raise the level yet again? When the Financial Services Authority (FSA) first outlined the scope of the RDR, one of the options it considered was the imposition of graduate level entry (the RDR’s minimum Qualifications and Credit Framework level 4 is the equivalent to the first year of an undergraduate degree).

It rejected that possibility, taking the view that it was too great a step change for the sector, but the trend across the professions is clearly for higher qualifications, and firms and individuals may consider the benefits of ‘future proofing’.

The Chartered Institute for Securities & Investment (CISI) offers practical options for those who want to attain a benchmark or a higher level qualification.

The level 4 Diploma in Investment Advice is a three-unit qualification (FSA regulation and professional integrity; investment, risk and taxation; and one unit from securities, derivatives or private client advice) which, while meeting the new exam standards, retains for all but the level 5 Private Client Advice unit the most accessible feature of the level 3 certificate that it replaces for retail candidates, that is, computer-based testing.

For those aiming higher from the outset, or seeking a progression route after the Diploma in Investment Advice, the CISI Masters in Wealth Management offers the possibility of attainment at postgraduate level. It is listed by the FSA as a transition qualification for RDR, requiring only qualification top-up in the form of continuing professional development (CPD).

The CISI is currently revising the syllabus to ensure that the Masters is compliant with the new exam standards for the first examination in December 2010. Those taking this revised syllabus will not need to undertake any CPD top-up for any of the activities covered by the RDR.

Whatever the future might hold for the benchmark level, the wider imperative of professionalism embedded in the RDR will have a dramatic impact on firms and individuals long after qualifications are gained.