The recent announcement of the definition of “fit and proper” in respect of providing financial advice has been welcomed by the national head of retirement-fund consulting at financial and risk services provider Alexander Forbes, Neil Lloyd.
“What is good news is that a person with no experience and no qualifications will no longer be able to give financial advice, which should help to protect the man in the street,” says Lloyd.
The latest instalment of the Financial Advisory and Intermediary Services Act outlines the requirements that any person providing financial advice must meet.
According to Lloyd: “The new requirements will certainly increase the professional standing of the industry. To be able to provide advice, one will need to be able to demonstrate they meet the minimum requirements of ‘fit and proper’.”
The “fit and proper” requirements cover four key areas:
Honesty and integrity;
Competency;
Operational ability; and
Financial soundness.
“The checks that relate to honesty and integrity, operational ability and financial soundness clearly add assurance regarding the standing of your adviser,” says Lloyd.
Lloyd explains that the “competency” check has been the more controversial part of the legislation.
“There has been significant debate around how to determine what is an appropriate minimum level of experience, academic standard and qualification for a person to be deemed ‘fit and proper’ to provide financial advice,” he points out.
Minimum experience requirements and minimum academic qualifications have now been set out.
“I am pleased the requirements recognise that more experience is needed if a person has less, or lower, relevant academic qualifications. Similarly, a person with higher, relevant qualifications will need less experience,” Lloyd states.
These requirements complement the code of conduct already announced by the government as part of the Financial Advisory and Intermediary Services Act.
“Once the requirements have come into effect, any persons providing advice will need to demonstrate that they are ‘fit and proper’,” Lloyd adds. — I-Net Bridge