Proposals for raising the proficiency standards for financial advisors were published Wendesday by the UK’s Financial Services Authority.

The FSA says that its proposals are intended to enhance the professionalism of investment advisors under its Retail Distribution Review, which is “seeking to rebuild people’s trust and confidence in the retail investment market by raising standards of professionalism.”

The UK regulator has previously announced plans to eliminate commissions and to divide the advisor population into “independent” and “restricted” groups.

On Wednesday the FSA said that a key element of its’ wide-ranging reforms is that by the end of 2012, all advisors, whether independent or restricted, “will need to demonstrate greater knowledge and skills and meet enhanced standards in dealing with clients. “

The FSA is proposing to create a new in-house governance structure to ensure advisors achieve this greater level of professionalism, both initially and on an ongoing basis through the achievement of new, higher level qualifications; meeting enhanced standards of continuing professional development; and adhering to common ethical standards.

The regulator says that this approach would enable it to apply its more intensive supervisory approach, including its greater focus on individuals in key positions, to the retail investment advice sector. At the same time, the FSA is proposing that professional bodies, registered with and overseen by the FSA, should play a greater role in helping their members meet its new professionalism requirements.

“Raising professional standards is a core strand of our reforms of the retail investment market. Through this, people will come to expect the same level of professionalism from investment advisors as they do from other professions. We will closely supervise the necessary improvement in standards that we are seeking to bring about which, along with the other aspects of the RDR, will come into force from the beginning of 2013,” said Sheila Nicoll, the FSA’s director of conduct policy.

The FSA is seeking comments on its proposals by March 16, 2010.

IE