The ICAEW and FSA accreditation – what does it mean for your firm?
The news on Tuesday 24 January that the FSA has granted ICAEW ‘accredited body’ status to certify retail financial advisers is something of a coup for the Institute – it’s the first accountancy body to be given the status.
The ICAEW’s new role is part of the Retail Distribution Review (RDR), the biggest shake-up of the market for retail financial advisers for many years. Among other changes, the RDR requires advisers to be awarded a ‘statement of professional standing’ (SPS) from an accredited body by the end of 2012, demonstrating that they are properly qualified and committed to ethical and professional standards. In essence, the Institute will act as a ‘sub-regulator’ enforcing professional standards of conduct and competence on the FSA’s behalf, providing qualifying financial advisors with their SPS and monitoring their professional development.
I thought the ICAEW already licensed financial advisers as a Designated Professional Body (DPB). What’s changed?
The ICAEW has for several years acted as a DPB, licensing member firms which offer ‘non-mainstream’ financial services (such as advice on the sale of shares in a private company) that are incidental to their accountancy practice. Being licensed by the Institute is a ‘lighter-touch’ alternative to being authorised by the FSA (whether directly or as an appointed representative of an FSA-regulated firm).
It seems likely that this regime will continue largely unchanged for DPB-licensed firms. Only retail advisers conducting mainstream investment services (i.e. those currently unable to rely on DPB-licensing) will be affected by the RDR. The requirements all affect individuals who provide such investment advice and services to clients, whether they work for firms which are directly authorised or an appointed representative.
I have a chartered accountancy practice which is also FSA-authorised as a financial adviser. Does this mean the ICAEW will ‘audit’ my investment advice from now on?
No – the FSA has made clear in a factsheet that the ICAEW’s role will be focused on checking that individuals are suitable to receive an SPS, and that they adhere to professional standards of practice. The firm is responsible for its advice to clients, and will account for this to the FSA as its main regulator.
The ICAEW will conduct random checks that advisers are continuing to meet continuing professional development requirements. This is part of its duties as an accredited body.
What happens next?
The ICAEW is in the process of finalising its rules as an accredited body, and is expected to begin accepting applications for the SPS from April 2012. Advisers will need to ensure they have completed any relevant qualifications to meet the RDR standards, and obtained their SPS, by the end of December 2012.
Contributed by Jeremy Williams