Auto IFA authorisation premature, Commission says

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The Institute of Financial Advisers (IFA) will have to wait until competence standards are approved by the yet-to-be-formed Code Committee before its request for automatic authorisation of its members can be considered, according to the Securities Commission.

Wednesday, May 27th 2009, 5:28AM

by David Chaplin

Securities Commission director of supervision Angus Dale-Jones told Good Returns that decisions about acceptable competence levels for financial advisers required under new legislation "ultimately are for the Code Committee".

"Submissions from professional associations and other interested parties will help ensure that the Committee, the Commissioner for Financial Advisers, and the Commission are properly informed about possible competence standards, and possible ways to demonstrate that a person meets those standards," Dale-Jones said.

Currently the Commissioner for Financial Advisers is looking for people to be appointed to the committeee.

Under the law, practitioners who fall under the Authorised Financial Adviser (AFA) category - essentially those who deal in investment and full financial planning advice who are not acting for a Qualifying Financial Entity (QFE) - will have to prove their competence.

The competence tests are expected to comprise of formal education standards and/or individual assessments of advisers.

In a statement issued yesterday, the IFA argued that all of its general members - who are required to have passed the 'level 5' educational papers and experience two years of mentoring - should be granted automatic AFA status.

Lyn McMorran, IFA president, said the group's general members should not have to be tested as they already have demonstrated standards beyond the expected minimum AFA competence standards.

"I think that when the applications for AFAs come out the Securities Commission will be swamped," McMorran said. "It would be silly to assess all advisers. The Commission needs to focus on those who are not members of an industry body and have met not educational standards."

Dale-Jones said the Commission's recent discussion paper on competence standards included guidelines for how financial advisers were expected to assessed.

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