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August 19, 2013

Where the buck stops on SPS Statements

One outcome of the Retail Distribution Review is that client-facing individuals are required to obtain a statement of professional standing (SPS) – effectively a practicing certificate – from an accredited body as evidence that they are meeting the standards. The employer must ensure that the required structured and unstructured CPD is completed annually and that relevant Statements of Professional Standing are issued. The latter are issued by the relevant professional body – such as CISI.

The problem for wealth managers and other retail firms is that the SPS certificate is not just a responsibility for employees. If the employer relies solely on the employee to self-attest that they hold a valid SPS and that employee subsequently provides poor financial advice, and in the subsequent investigation it emerges that the SPS was invalid, then who is liable? Presumably the wealth manager for failing to operate robust CPD controls.

Many firms now appear to rely on individual advisors maintaining CPD or training and competence (T&C) privately through their relevant professional body. This is a high-risk strategy for such firms to adopt. In reality, all CPD should be monitored and verified by a supervisor. Additionally, broader T&C should be managed and maintained as part of a wider compliance and performance assessment monitoring process – that is managed and supervised internally, and firms should have robust controls to ensure they track advisor SPS renewal dates.

By Neil Herbert Blog Share:
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