Standards and the Professional Code of Conduct

The next issue under review in this series is the standards to which intermediaries and advisers should be held accountable, and the Code of Conduct which governs adviser behaviour. Please forgive the language if it offends, but accountability is the appropriate term in this context, as the concept of standards is critical to perception and credibility.

The standards as laid out in the Code of Conduct apply to those advisers currently subject to the measures articulated in the document, i.e. Authorised Financial Advisers.

Continuing the theme of ‘overlapping issues’, may I refer you back to the “Designation” and “Education” posts that outlined the need for exclusive use of the term “Qualifying Financial Advisers” being available only to those suitably qualified by education.

The trade-off in this regard is that the Code of Conduct should now apply to all newly designated “Qualified Financial Advisers” – which includes those who are currently referred to as “RFAs”.

However, there will be Financial Advisers from various areas of the industry and while some parts of the Code are common to all, other parts will need to be re-drafted to apply to all Financial Advisers with regard to whichever aspect of the industry they operate.

Therefore, all Qualified Financial Advisers (QFAs) will be subject to the same Code of Conduct and the same standards.

QFA’s who have a contractual obligation to what is currently referred to as a Qualifying Financial Entity (QFE) should be able to use the post-nominal QFA, provided the nature and practice limitations their relationship with the QFE is fully disclosed to the client.

In this way, a broader accountability is created, the consumer is provided with a clearer understanding, and the industry achieves greater credibility by defining the responsibilities of the advisers involved.

The picture is building of an appropriately structured adviser industry, but in order to give the Code definition, and in order to add to the understanding of the consumer we need to look at what constitutes advice and what constitutes a sale.

More to follow……….