Professionalism Requirements For Retail Investment Advisers

Question 1

Retail Distribution Review (RDR) resulted in professionalism requirements for retail investment advisors.

What are these requirements?

Answer 1

1. Subscribe to a code of ethics
2. Hold an appropriate qualification, including any qualification gap-fill (fill knowledge gaps)
3. Carry out at least 35 hours of continuing professional development (CPD) a year
4. Hold a statement of professional standing (SPS) from an accredited body (to prove they meet standard requirements)

These standards are maintained and enforced by the FCA .
Advisors must submit data over any 12 month period.

Question 2

Briefly explain what “Ethical Standards” are with regards to retail investment advisers?

Answer 2

1. Their aim is to increase professionalism.
2. FCA amended the APER to emphasise accountability on how actions affect public perceptions.
3. These statements of principle apply to all approved persons, not just those subject to RDR.
4. To obtain SPS - advisors are required to make an annual declaration to the accredited body that they have complied with APER

Question 3

What is APER?

Answer 3

1. APER was a set of FCA rules for individuals in key roles at financial firms.
2. It set standards for honesty, integrity, and competence.
3. It applied to approved persons—those needing FCA approval.
4. APER has mostly been replaced by SM&CR Conduct Rules.
5. Now, SM&CR covers more employees and sets clearer accountability rules.

Question 4

Briefly explain what “Modernised Qualifications” are with regards to retail investment advisers?

Answer 4

1. These are FCA listed qualifications appropriate for investment advice activities.
2. Contain the combination of all the new qualifications.

Old qualifications- require knowledge gap fill
New qualifications - meet the modernised exam standards

Question 5

Briefly explain what it means to “keep knowledge up to date” for retail investment advisers?

Answer 5

1. Advisers need to complete a minimum of 35 hours of CPD each year.
2. This is for retail investment activities.
3. Out of the 35 hours, 21 hours should be structured
4. Structured learning activities include seminars, lectures, conferences, workshops or courses, and completing appropriate e-learning

Question 6

Briefly explain what “Accredited Body” means with regards to retail investment clients.

What are they responsible for?

Answer 6

1. Ensure all advisors who use their services are subscribing to a code of ethics that is consistent with the statements of principle for FCA approved persons.
2. Checking that all of the advisors who used as services hold an appropriate qualification, including verifying 100% of the gap-fill where required (extra learning to meet standards)
3. Carrying out a random 10% CPD record/ sample check on advisors (can vary)
4. Recognising/ approving CPD activity from a range of providers including firms’ own in-house schemes

Question 7

List the four main concepts under “professionalism requirements for retail investment advisors”

Answer 7

1. Ethical standards.
2. Modernised qualifications.
3. Keeping knowledge up-to-date.
4. Accredited bodies.