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ISO 22222 The international Standard for Personal Financial ...

ISO 22222 The international Standard for Personal Financial ...






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  • The original role of standards was to bring about improvement in the manufacturing economy by reducing the variety in materials, products and processes and therefore eliminting waste and promoting trade. However, it soon became apparent that standardisation also had an important role in setting standards for the quality and safety of goods and services. Standards now define safety and quality requirements for an enormous range of consumer goods – it is estimated that at least one third of some 13,000 standards in the BSI catalogue are of interest to consumers.
  • But its more than that. As consumers ourselves we know when we are shopping around or buying something for the first time - how much easier it is to have a benchmark to work against? How do you calculate whether something you have bought or a service you have received, is value for money, unless you have something to measure it buy? This holds true for any service - but it is particularly important when dealing with something as complex as financial advice. Unlike other consumer services, with financial advice, the consumer has little or no tangible way of measuring the service they receive. This leaves them vunerable and powerless to drive the market. One of our biggest concerns is this imbalance of power between the consumers of financial services and the providers of those services. In other markets, if consumers don’t like the service they receive they vote with their feet. This doesn’t happen with financial advice, and one of the main reasons is that consumers don’t know they’ve receievd a poor service, often until its too late.
  • No-one likes to feel vunerable or at a disadvantage, but that’s what consumers of financial services feel all the time. These are some of the reasons why our members (your customers) tell us that they are nervous of taking financial advice or seeing a financial adviser. Becasue they think they will get ripped off; or because they have been ripped off in the past. Because they don’t understand what you are talking about - you talk in jargon and blind them with science. Your products have complex chanrge and conditions that makes it impossible to shop around and compare the products of different providers. Your terms and conditions often lock them in or penalise them if they don’t like the service you’re giving and want to move on.
  • and because of how your industry has served them in the past. For as long as I have been in financial services I’ve heard representatives of the industry bemoaning the lack of consumer trust in the industry. In fairness to those representatives many of themseem genuinely to want to improve the situation and are constantly asking the question - how can we make consumers trust us?
  • I think the answer to this could be yes - provided the standard lives up to the expectations placed upon it - and provided the industry embrace it. And by the industry I mean ALL the industry - not just the independent sector. This won’t work unless the big providers get behind it as well.
  • To be effective, the standard must be something that financial advisers will need to work towards, or at the very least will have to apply for and prove eligibility. It will lose credibility very quickly if the majority of advisers who simply hold the FPC are grandfathered in. However, it does need to be achievable – not something so tough that only the academic few, with fees to match, will attain it. The standard must have teeth. Advisers must be capable not only of attaining the standard in the first place, but of maintaining it. And they must be fearful of losing it - they should know that if they don’t keep to the standard it will be taken away. It must be measurable. I think this is one of the most important aspects of any standard and it is particularly so for financial advice. This is where the big difference with the current system will be. How great would it be if organisations like CA and other consumer bodies could set out in simple language what an adviser that achieves the ISO standard must do for you? Consumers should be able to measure whether their adviser is providing them with a service that meets the standard. Finally, it should be capable of being tested a regular basis by an independent body.
  • If you read through the four parts of the current draft I honestly believe there is nothing in there that a reputable, professional financial adviser isn’t doing anyway. I also believe that if the ISO were introduced today there are many advisers that wouldn’t attain it. But then, in our view, perhaps those advisers should be practising anyway, and in the new market when we finally see it –maybe they won’t be. However, I genuinely believe there is nothing currently in the standard that should exclude those financial advisers who are serious about raising standards in this profession, whether they work for a bank, a life insurance company, a high street family firm or a national IFA. It’s about giving the right financial advice and putting your customers first.
  • One of the things we are all agreed on is that standards do need raising. We are also all agreed that there’s no doubt consumers desperately need financial advice and financial advisers. But they also need protection from bad advice. Our hope had been that the regulator, who’s job it is to protect consumers, would take a proactive role but instead they are stepping further and further back from it. But whether consumers are buying a complex product, or a simple product or no product at all they will need advice - so therefore the quality of that advice must improve
  • Well - it could be the measuring stick so badly needed for consumers to evaluate the service they are receiving and to start making informed choices as to who will provide them with those services and to make a judgement as to whether they are receiving value for money. It could, of course, be a stick to beat you with.
  • Or -for those advisers brave enough to put the service they offer up against this test - it could be the beginning of a new era for financial advice. I really hope so. I’ve been really impressed by the genuine desire of all the experts on this technical committee to raise standards in this industry and to put the needs of consumers first. I look forward to working with them over the next couple of years to see that desire - and this draft standard - become a reality. Thank you

ISO 22222 The international Standard for Personal Financial ... ISO 22222 The international Standard for Personal Financial ... Presentation Transcript

  • ISO 22222 The international Standard for Personal Financial Planners “ The best of 3 ?” Peter Williams Deputy Chairman BSi SVS/6 Financial Services (Representative for the Chartered Insurance Institute). Head of Industry Development, AEGON UK
  • Agenda
    • Why do we need/have ISO standards
    • SVS/6 and ISO 22222 committee
    • Scope of ISO 22222
    • BS 922 – UK guidance
    • ISO 22222 – what is the ‘standard’
    • The consumers view
    • RDR – where does the ISO fit
    • The next stages
    • Any questions
  • Why Standards?
    • 1901 Engineering Standards Committee established
    • 1929 Royal Charter granted
    • 2003 Employs over 5000 worldwide
    • 2003 Publishes 1500 standards a year
    • Most famous ISOs – the ‘ISO 9000 series’
  • International Committee – ISO/TC 222 Participants Hong Kong Mexico USA UK Turkey Sweden South Africa Singapore Norway New Zealand Malaysia S Korea Japan Germany France Colombia Canada Austria Argentina Australia
  • ISO/TC 222 Observers Yugoslavia Viet Nam Trinidad and Tobago Switzerland Spain Russian Fed Poland Netherlands Mauritius Kuwait Jamaica India Egypt Costa Rica Bulgaria Botswana Bosnia and Herzegovina Armenia
  • ISO/TC 222 Structure WG 1 Definition, process, practice mgt Convenor - USA WG 2 Competences Convenor - Germany WG 3 Ethics Convenor - UK WG 4 Experience Convenor - UK* ISO/TC 222 Personal financial planning Secretariat – Germany (USA)
  • A united industry SVS/6 appoints UK expertise to attend the international Work Group meetings. Last Work Group meeting was held in Berlin, in March 2005. Agreement reached. Following public consultation, the BSi published BS ISO 22222 in March 2006 UK Representatives in Berlin were:- Professor David Jackman – Head of Delegation/Convenor WG3 Peter Williams – Deputy/‘Acting’ Head (CII) Dr George Wilson – Consumer Representative Gavin Tisshaw – Convenor WG4 (PFS) Fay Goddard – (AIFA) Peter Bennett – (IFS) Lucy Courtenay – (FSSC) Carol Eddleston – BSi Previous ‘experts’ have included; Theresa Fritz (Which?); Ken Soloman (ICAEW); David Kanolik (IMA); Viorica Bergman (Consumers)
  • Scope of the (financial planning) international work
    • Standardization in the field of financial planning, including standardization of the certification of practitioners based upon elements of:
    • education,
    • examination,
    • experience and
    • ethical conduct
    • Plus
  • standardization of the personal financial planning process which typically includes but is not limited to
    • establishing and defining the client/planner relationship,
    • gathering client data including goals,
    • analyzing and evaluating the client’s financial status,
    • developing and presenting financial planning recommendations and/or alternatives,
    • implementing the financial planning recommendations and
    • monitoring the financial planning recommendations
  • Drafts previously released for public comment
    • ISO 21551 Definition and process of personal financial planning
    • ISO 21555 Requirements for competence of a personal financial planner
    • ISO 15551 Ethical requirements
    • ISO 23449 Experience requirements
    • Now merged into one document (in Berlin)
    • BS ISO 22222:2005 Personal Financial Planning
  • One international anxiety- only third-party conformity assessment should be allowed
    • BSi established a workgroup to develop UK guidance
    • BS 9222 – Guidance on ISO 22222 now available
    • Key points
    • Assessors must hold ISO 17024
    • Adviser expected to hold an advanced level qualification (beyond FPC)
  • Who is offering ISO assessment
    • Currently 2 organisations are piloting ISO 22222 and applying for ISO 17024
    • Standards International
    • CII
    • Others are expected to follow
  • Where does the ISO sit in the UK
    • ISO 22222 is set at Level 8 of the
    • Scottish Credit and Qualification Framework
    • (SCQF). This is HND, first year of a bachelor degree.
    • SCQF has 12 levels.
    • SCQF uses “Level Descriptors” to define
    • outcomes
  • Qualifications and levels FPFS Fellowship (10 papers) (Masters) QCA 6/7 SCQF 10/11 Associateship (old 6 AFPC) (Degree) QCA 5/6 SCQF 9/10 QCA 4/5 SCQF 7/8 Cert. PFS (“old” FPC) Certificate in Financial Planning QCA 3 -A Levels & Highers ( L6) Dip PFS Diploma in Financial Planning (3 AFPC papers – old MSFA) CFP / ISO APFS Chartered/Associate PFS (+ other) Designation Adviser Qualification QCA/SCQF level
  • The Stages ISO Qualifications Advanced Diploma Soft Skills Diploma (AFPC) FPC (CertPFS) FP1 Timeline Level of competence 1-2 yrs 2-5 yrs
  • More than just exams
    • The 6 stage financial planning process – knowledge & skills
    • CPD
    • Experience
    • And…..
  • Ethical Principles
    • Behave with integrity
    • Put client’s interests first
    • Exercise due care and diligence
    • Work within regulatory and legislative frameworks
    • Carefully managed conflicting interests
    • Communicate in a clear and appropriate manner
    • Provide suitable and objective recommendations
    • Protect client confidentiality
    • Disclosure
    • Appropriate competence
  • The ISO process – right for you
    • Do you have a financial planning qualification above FPC ? (AFPC/Diploma)
    • Are you a member of the PFS (or other professional body)
    • Do you meet the ISO standards ?
  • The Consumer View (provided by Which? )
  • Why are standards important for consumers?
    • Original role was the improvement of the manufacturing economy
    • Standards now define safety and quality requirements for an enormous range of consumers goods
    • Estimated that at least one third of the approximate13,000 standards in the catalogue of the BSI are of interest to consumer
  • Why are standards important for consumers ?
    • Standards reassure consumers and give them a tangible means of evaluating the product they are buying or the service they are receiving.
    • How else can you calculate ‘value for money’
  • Reasons not to be cheerful
    • Consumers are nervous
    • Because they think they will get ripped off
    • Because they have been ripped off
    • Because we blind them with science and talk in jargon (plain English/ISO)
    • Because of complex charges and conditions that make it impossible to shop around (TCF/Raising Standards/Menu)
    • Because of terms and conditions that penalise them if they don’t like the service you’re giving them and want to move (TCF/Raising Standards)
  • And because of …
    • a horrible history of some poor quality financial advice
    • Home income plans
    • Mis-selling of MIPs
    • Mis-selling of whole life max cover
    • Personal pension mis-selling
    • FSAVC mis-selling
    • Endowment mis-selling
    • Precipice Bonds
  • Standards and financial advice So will an ISO standard benefit consumers of financial advice and products? Yes ....but
  • What does the standard need to be?
    • It should:
    • be aspirational
    • be achievable
    • have teeth
    • be measurable
    • be measured regularly by an independent body
  • The ISO standard
    • Nothing there that shouldn’t already be happening
    • But many advisers would fail if the standard came into place today
    • However, nothing there that should exclude advisers serious about their profession – and their customers
  • Do standards need raising?
    • Yes
    • Consumers need advice and advisers
    • The quality of advice must improve
    • Hence the welcomed agreement for Level 8 (SCQF)
    • (and isn’t this what the RDR is aiming to deliver?)
  • So, what should the ISO standard mean to consumers?
    • It will be a further measuring stick so badly needed for this crucial service.
  • And...
    • For those advisers brave enough to put the service they offer up against this test -
    • it could be the beginning of a new era for financial advice
  • RDR – where does the ISO fit
    • 3 levels proposed Primary, GFA, PFP
    • Increasing comment that 3 is too many
    • Should GFA/PFP merge?
    • If so, what level? Diploma plus a planning module (Dip + AF5/CFP/ISO)?
    • Chartered will still remain the gold standard and the aspiration for professionals ( and compulsory for new entrants?)
  • So what are the PFS/CII doing
    • Remember all new Chartered Financial Planners need AF5 or equivalent
    • The CII are currently giving exemptions to the CFP and ISO.
    • ISO will this be worth 30 credits in the CII exam framework
    • Options thus: AF5 (Exam); CFP (Case study); ISO (assessment – measures what you actually do!)
  • The next stages
    • Get the ISO up and running
    • Consider a ISO practice standard? Would this be useful for firms ?
  • Any Questions?