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· Retail sector qualifications
· Securities and Banking sector qualifications
· Other qualifications
People working in compliance have not always had to hold specific qualifications. However, with the increasing importance of compliance and the growing involvement of the FSA, qualifications are also becoming more important.
Qualifications vary, depending on what sector of the industry you are working in. The main split is between the retail sector and the securities & banking sector.
Retail sector qualifications
The Chartered Insurance Institute (CII) offers a range of qualifications relevant to the insurance and life, pensions and investments sector.
1. FPC - Financial Planning Certificate
For those wishing to pursue a career in compliance within the life, pensions, investments and general insurance industry, the FPC is fast becoming a minimum requirement for successful career progression.
Originally developed for financial advisors, to provide a broad based knowledge of key topics for financial planning, this qualification has 3 component parts:
FPC 1 - Regulation and compliance
The FPC1 exam is a 2-hour paper of 100 multiple choice questions and focuses on a variety of topics relating to regulation and compliance.
FPC 2 - Protection, savings and investment products
The FPC 2 is a 2-hour paper with 60 multiple choice questions and 40 true/false questions and aims to develop candidates' specific product knowledge and their ability to apply it when advising clients.
FPC 3 - Identifying and satisfying client needs
The FPC 3 exam is a 3-hour paper with 3 case study related questions, which tests a candidates ability to conduct a factual check of a clients' needs, to assess those needs and to be able to recommend appropriate products, considering the regulatory framework and the various products and providers covered in FPC 1 and 2.
The CII web site www.cii.co.uk offers comprehensive information on the examination procedure, syllabus and recommended reading lists.
2. AFPC - Advanced Financial Planning Certificate
The AFPC is a level up from the FPC and is recommended for financial advisers whose clients demand a more sophisticated approach to their financial planning.
Candidates must hold the Financial Planning Certificate or equivalent qualification accepted by the FSA as comparable, such as the Investment Advice Certificate, Investment Management Certificate or full Certificate for Financial Advisers.
Alternatively, providing the candidate is authorised to conduct investment business by their recognised professional body, i.e. they have 'qualified person' status granted by the Law Society, they may enter directly for any G or H prefix exams.
AFPC candidates are then required to obtain three credits.
The first credit is a full credit compulsory paper: G10 - Taxation and Trusts
The candidate can then select from a variety of optional papers, some full-credit and some half-credit papers:
In 2003, the optional papers and exams were as follows:
Optional full-credit papers:
G20 - Personal Investment Planning
G30 - Business Financial Planning
G60 - Pensions
G70 - Long-term care, life and health protection
G80 - Investment Portfolio Management
H15 - Sales and Supervision Management
H25 - Holistic Financial Planning
Optional half-credit papers:
K10 - Retirement Options
K20 - Pension Investment Options
Full-credit exams
The full-credit subjects consist of a 1-hour written exam based on a case study approach, with the exception of the Holistic Financial Planning (H25) paper, which consists of a 3-hour case study based on pre-released material. These exams carry 200 marks and are spread over three sections:
1. Compulsory short answer questions on the entire syllabus - 45 marks
2. Compulsory case study for analysis - 75 marks
3. Choice of 2 from 3 questions for discussion based answers - 80 marks
Half-credit exams
The half-credit subjects consist of a 2-hour exam with 14 short-answer questions each worth 10 marks.
The exam sittings for full and half-credit exams take place twice a year in April and October and the most popular AFPC papers taken by compliance professionals include the G10, G60 and H15.
The AFPC is becoming more widely recognised as an aid to regulatory compliance and good practice. For example, the FSA recognises the G60 as an approved qualification for pension transfer specialists working in firms practising pension transfer and opt out business, and the variety of papers offered allows compliance professionals the opportunity to select what is most relevant to their career. Whilst only a small number hold the full AFPC, compliance professionals holding one or more of the AFPC papers are more likely to succeed in achieving career progression and improved remuneration.
3. MAQ - Mortgage Advice Qualification
The FSA took over regulation of mortgage business from 31 October 2004 and general insurance business from 14 January 2005. Prior to that, the Mortgage Code Compliance Board (MCCB) was responsible for regulation, and, from 31st December 2002 stipulated that all registered mortgage advisers must have achieved a professional mortgage qualification, such as the MAQ, which was specifically established for mortgage advisors.
Compliance professionals who work for organisations operating mortgage business are often required to obtain the MAQ or equivalent qualification. This reinforces the concept of "best practice" and helps ensure a thorough understanding of mortgage products, client needs and the regulatory framework.
The MAQ comprises one 3-hour examination, which is divided into a multiple-choice paper with 50 questions and two case studies. Holding the full FPC and MAQ provides candidates with a half credit towards the AFPC.
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Securities and Banking sector qualifications
The Securities Institute was set up in 1992 by the members of the London Stock Exchange. Today, the Institute is the professional body for those who work in the securities and investment industry in the UK and offers a variety of qualifications relevant to the financial services industry.
1. Securities Institute Certificate Examinations (previously Registered Persons Examinations)
These qualifications were designed for those who work in the securities and derivatives markets and have to attain FSA "Approved Person" status. They can be taken before starting employment, but most examinees are already working. Holding a certificate enables them to advise and deal in securities & derivatives and manage investments.
The programme offers certificates in:
· Securities
· Derivatives
· Securities and Financial Derivatives
· Investment Management
· Corporate Finance
The Securities Institute Diploma is more popular with compliance professionals. However, where someone has, for example, advised on or dealt in securities and then moved into compliance, they have probably passed a relevant "Registered Person" or "SI Certificate".
2. Securities Institute Diploma
The SI Diploma is a FSA recognised qualification for a variety of activities including advising on and dealing with investments in securities, and managing investments relating to venture capital.
The qualification reflects real situations that could be encountered, in which candidates have to apply the knowledge they have acquired. The course comprises case studies, report writing and explaining terminology and techniques.
There are 3 component parts to the SI Diploma and it is advised to only undertake one exam at each sitting. Most candidates take 2 years to complete the Diploma.
For compliance professionals working in investments and securities the most appropriate subject is "Regulation and Compliance". Other subjects include:
· Bond and Fixed Interest Markets
· Corporate Finance
· Financial Derivatives
· Fund Management
· Global Operations Management
· Interpretation of Financial Statements
· Investment Analysis
· Private Client Investment Advice and Management
Each examination lasts approximately 3 hours and, although grades are not released publicly, they are made known to candidates.
3. Investment Advice Certificate
This qualification is designed to provide a widespread knowledge of regulation and investment products, as a basis to give appropriate financial advice.
The course covers a variety of topics, including life assurance and pensions, equities, bonds, derivatives and collective investment schemes which are the products that most private customers will come into contact with.
There are 3 component papers to the Investment Advice Certificate:
Paper 1 "An Introduction to Financial Services"
Paper 2 "Investment, Savings and Protection Products"
Paper 3 "Financial Advice"
This qualification is recognised by the FSA, The Law Society, The Law Society of Scotland, Jersey Financial Services Commission and the Institutes of Chartered Accountants. Not only is it recognised by these professional bodies and regulators but it is also highly regarded by some of the world's largest financial services organisations operating in the UK.
4. Investment Administration Qualification
This qualification is aimed at staff working in operations or administration functions and is designed to provide them with a general view of the financial services industry, its regulation and more specific details of their particular industry sector.
It is also popular amongst compliance professionals due to its focus on best practice which is so important to the financial services industry.
The benefits of completing the examinations include leading to affiliate membership of the Securities Institute.
The qualification is made up of 2 core modules and 1 technical module. The core modules are:
1. Introduction to Securities and Investment
2. The FSA Regulatory Environment
Candidates then choose a technical module relevant to their role and industry sector, which include:
1. CREST Settlement
2. Exchange-Traded Derivatives Administration
3. Global Custody
4. ISA and PEP Administration
5. OEIC Administration
6. OTC Derivatives Administration
7. Portfolio Performance Management
8. Private Client Administration
9. Unit Trust Administration
10. Operational Risk
11. Global Settlement
12. Life Policy Administration
13. Pensions Administration
Modules 1, 2, 3, 4, 5, 8 and 9 are recognised by the FSA.
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Other qualifications
A number of universities offer a degree in financial services, some BA, some BSc, which can be a very good start to a successful career in compliance.
Universities offering courses in Financial Services include London Guildhall University, Napier, UMIST and the University of Westminster.
London Guildhall University also offers a masters degree programme, which is a vocational qualification for regulation and compliance professionals. The qualification aims to be similar to a MBA for those who wish to progress into senior management positions. The Masters in Financial Regulation and Compliance Management is a 2-year part-time course, and covers a wide variety of compliance issues, from the objectives of regulation to management issues in compliance, governance and strategy and overseas regulation.
There are still very few compliance professionals with this qualification but it could be invaluable to compliance professionals who wish to move into senior roles.
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