Challenge for the private banks

Additional hurdles must be cleared by those offering clients more sophisticated investment advice.

Private banks face the same set of regulations, but have a different set of hurdles to negotiate, says the BBA’s Peter Tyler.

“Many private bankers will already be qualified to the required level as their investment advice is generally more sophisticated: they’ll have the CIOBS exams or the CISI, or CII exams at that level and higher.

“But what they need to do with continuing professional development (CPD) is gap-fill any new aspects which the Financial Services Skills Council is currently finalising. So, even very senior advisers in this market will need to do some CPD to maintain minimum standards that the FSA require by the end of 2012.”

Private banks also face issues around discretionary investment management advice, explains Tyler, and what is and isn’t caught by the RDR rules. “Pure investment management activity is carved out of the RDR. But, if you’re giving discretionary investment management advice alongside other advice, then you’ll need to up-skill your professional standards, for example.

“There’s also uncertainty about the final scope of the products to be covered by the RDR. As an independent adviser, you are going to have to meet a new test under the RDR rules regarding the definition of ‘retail investment products’ which determines the products you must consider when providing independent advice.”

Another uncertainty is that the RDR proposals are based on business in the UK, Tyler warns. “So, what if you’re working with overseas investments dealing with companies with a different charging regime? There are cross border competitive issues to be considered there.” And, finally, with a new European Commission being formed, a lot of policy briefs currently ‘on hold’ could override the provisions of the RDR in 2013.

“But the professionalism side remains a given,” Tyler insists. “We strongly support the step-change in up-skilling the standards in investment advice. And we strongly encourage our members to support their people, whether bancassurers or private bankers, in moving up to those minimum standards of investment advice, finding out what they need and filling those gaps, as soon as possible.

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