FCA sends UK advisers back to school with reassessment test

The Financial Conduct Authority (FCA) and Chartered Insurance Institute (CII) have launched a reassessment test  to determine  whether or not advisers with the Level 4 Diploma in Financial Planning still have sufficient knowledge.

While use of the test is voluntary, the regulator has warned it may force advisers to take it if deemed necessary. Instead the regulator wants advice firms to use the test to assess the skills of individual advisers. “This is part of a firms” obligations to ensure that advisers are and remain competent,’ the CII said.

Since the introduction of the retail distribution review in 2013 advisers have been required to pass the level 4 diploma exam, and are expected to complete 35 hours of continuing professional development every year to ensure their knowledge is up to date.

But according to the UK financial regulator “not all firms” test their advisers’ knowledge yearly as part of their Statement of Professional Standing, “with many advisers never retesting”.

The FCA said: “We believe that advisers having a good level of knowledge is the foundation to giving sound financial advice. This is particularly the case with the more technical aspects of financial advice.

“The objective of the re-evaluation is to identify areas of strength and weakness in technical knowledge and its application that underpins suitable financial advice.

“We will encourage firms to use it and we may also use it as a supervisory tool if we think it is appropriate to ask firms to re-test specific advisers.”

The test will contain 100 questions across areas of the CII’s R01-5 syllabi, prioritised by the potential for impact on the suitability of advice.

The CII says: “This test will provide firms with the ability to independently assess their advisers’ knowledge and development needs against the industry standard. This is part of a firms’ obligations to ensure that advisers are and remain competent.”

Advisers who take the re-assessment of their level four diploma and fail will not lose their existing qualification.

Advisers will be able to book the test from 17 September on the CII’s website.

Pedro Gonçalves
Pedro Gonçalves is Financial Correspondent at International Investment.

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