Standards of competence for financial advisers: The poor relation in international and regional regulation

Matthew Connell
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Matthew Connell: Director, Policy and Public Affairs, Chartered Insurance Institute, UK

Journal of Financial Compliance, 2020, vol. 3, issue 4, 359-367

Abstract: The level of competence among financial advisers is widely recommended as a key factor in ensuring good outcomes for consumers. Despite this recognition, international and regional regulatory codes, including codes in the European Union (EU) and the United States do little to set standards and give rigorous guidance on the kind of training syllabus that should be used for different types of advice, the kind of training that should be undertaken to achieve the necessary levels of knowledge and competence, and the kind of accreditation that should take place to ensure standards of competence are being met. This paper looks at different models of financial advice generated by existing consumer research. It then analyses the advice needs that are implicit in each of these advice offerings, and goes on to assess the adequacy of standards and guidance in key regulatory codes. It finds that current regulatory codes fall short of the standards needed to protect consumers. In particular, codes do not bring out a clear enough differentiation between the knowledge, skill and application requirements of their competence standards, nor do they articulate the issues around different approaches to setting standards, choosing different forms of training and testing competence. Finally, there is no clear and consistent thinking in international and regulatory codes around the merits of structured training and experience.

Keywords: financial advice; financial planning; conduct regulation; competence; training; holistic advice (search for similar items in EconPapers)
JEL-codes: E5 G2 K2 (search for similar items in EconPapers)
Date: 2020
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Persistent link: https://EconPapers.repec.org/RePEc:aza:jfc000:y:2020:v:3:i:4:p:359-367

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