Is new adviser re-evaluation test fit for purpose?

By Catriona Standingford

Go to the profile of Money Marketing
Oct 31, 2018

Eyebrows have been raised over the cost and relevance of the assessment

Earlier this month, the FCA and Chartered Insurance Institute launched a new test to reassess the level of knowledge of advisers with the Level 4 Diploma in Financial Planning.

The Regulated Retail Investment Adviser Re-evaluation assessment is aimed at raising standards and competence, although it is not compulsory.

Since the new test was announced, I have spoken with a number of advisers and trainers, with a very mixed response.

First, let’s look at its fundamentals. The test is two hours long and consists of 100 multiple choice questions (both standard format and multiple response) across the CII’s R01 Financial Services, Regulation and Ethics, R02 Investment Principles and Risk, R03 Personal Taxation, R04 Pensions and Retirement Planning and R05 Financial Protection units. These are the units that form the bulk of the CII’s Level 4 Diploma in Financial Planning.

The syllabus includes areas such as responsibilities and obligations to consumers, financial crime, types of risk, taxation, retirement planning and protection planning.

It can certainly be argued that there is a need to re-evaluate the competence of advisers, and it is true that not all firms test their advisers’ knowledge on a yearly basis. However, there is a question mark over whether this specific test is the way to do it.

The required 35 hours of continuous professional development each year is meant to maintain competence. Many say evidence of this should suffice and that the extra testing will do little to really raise standards further.

There are also those that say the test is simply a money-making exercise. Indeed, the cost has raised eyebrows. At £110 for CII/Personal Finance Society members or £150 for non-members, it does seem steep.That said, it is worth noting the FCA has stated it is working with some of the other bodies to create their own re-evaluation tests. Perhaps this means we will see similar tests more competitively priced from elsewhere in the future.

A very interesting point about this test is that the tax year 2018/19 will be examined until 31 August 2019 – five months after its end. This is in line with the CII’s examinable tax year for its qualifications and exam units, but why follow that for a test apparently developed to assess knowledge and understanding?

Indeed, the CII states that “this re-evaluation is for qualified financial planners who seek to measure or demonstrate their success in maintaining and applying up-to-date technical knowledge” and “this test evaluates your current technical knowledge gained through previous learning and regular CPD”.

The FCA states “the objective of the re-evaluation is to identify areas of strength and weakness in technical knowledge and its application that underpins suitable financial advice”. However, in April, June, July and August of every year, the test will be assessing the adviser on old technical knowledge from a past tax year.

Surely it would make more sense to test for the current tax year rather than for the previous? It certainly puts a question mark over whether this test really is fit for purpose.

Whatever your opinion, it will be interesting to see what the take-up is like despite the cost and the fact that it is out of date for five months of the year.

Perhaps it will be improved upon and become more fit for purpose in the near future, or perhaps another professional body will step in with another – better – option.

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John 8 months ago