The organisation is concerned that some firms may be “tempted to take the easy route” of a five-hour training course rather than encouraging staff to achieve a qualification awarded by a Chartered Body.
New regulations from the European regulator, ESMA, come into force from January 2018.
Although insurance companies are exempt from MiFID II, their asset management subsidiaries will be subject to them. The FCA already requires retail investment advisers to have qualifications under the RDR. However, advisers to professional clients such as fund companies and pension funds now will be required to have 'qualifications'.
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This applies to the retail and wholesale market and therefore is the first-time qualifications have been mandatory for the wholesale market since qualifications were changed to advisory by the UK regulator in 2007.
ESMA’s definition of a qualification is broad and does not distinguish in value between a five-hour training course or a benchmark, examined, level 3 (or 4) qualification, the Alliance said.
The FCA is proposing to let firms to decide which of these routes to take and to judge the fitness and competence of their employees.
The Alliance, comprising the CII (including PFS), CISI and Chartered Banker Institute, was founded last week, and this is the first issue it has spoken out about.
A statement from the organisation read: “The Alliance fears that some firms may be tempted to take the easy route to justify this qualification requirement and may opt for the minimum requirement of a five-hour bespoke training course.
“Commercial providers are already promoting training courses in place of examinations as an easier route to achieve the standard. The Alliance does not wish to see a ‘race to the bottom’.”
It said: “The Alliance is encouraging the FCA to guide firms to appreciate that the Guidelines are intended to provide a step change in employees' knowledge, and that the training and test options to 'qualifications' should reach the same level i.e. Level 3 or Level 4 (the current standard for the retail advisory sector).
“Whilst we understand that the FCA may not have the appetite or remit to do this, we see it as our duty, as the newly formed Chartered Body Alliance, to bring this new requirement to the attention of senior management in firms so that they have time to choose the best route to qualifications, and are not pushed into the easy training option because of the shortage of time.”
Typically, a Level 3 qualification would require about 100 hours’ study, and knowledge would be tested and verified during an independent exam, the body explained.