ISO 22222

The international Standard for Personal Financial Planners

“The best of 3 ?”Peter WilliamsDeputy ChairmanBSi 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?

BRIEF HISTORY OF BSI

• 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’

National Committee - SVS/6

ABCUL ACCA AIFA

Alliance for Finance

BSI CPC Which?

CIBS CII FSA

FSSC ICAEW IFP

IFS IMA PFS(SOFA/LIA)

LIMRA NABIC SII

SIFA UKAS UKSIF

International Committee – ISO/TC 222 Participants

Australia Argentina Austria Canada

Colombia France Germany Japan

S Korea Malaysia New Zealand

Norway

Singapore South Africa

Sweden Turkey

UK USA Mexico Hong Kong

ISO/TC 222 Observers

Armenia Bosnia and Herzegovina

Botswana

Bulgaria Costa Rica Egypt

India Jamaica Kuwait

Mauritius Netherlands Poland

Russian Fed Spain Switzerland

Trinidad and Tobago

Viet Nam Yugoslavia

ISO/TC 222 Structure

WG 1Definition, process, practice mgt

Convenor - USA

WG 2Competences

Convenor - Germany

WG 3Ethics

Convenor - UK

WG 4Experience

Convenor - UK*

ISO/TC 222Personal 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 WG3Peter Williams – Deputy/‘Acting’ Head (CII)Dr George Wilson – Consumer RepresentativeGavin 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

1. Assessors must hold ISO 17024

2. 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 theScottish Credit and Qualification Framework(SCQF). This is HND, first year of a bachelor

degree.

SCQF has 12 levels.

SCQF uses “Level Descriptors” to defineoutcomes

QCA/SCQF level

Adviser Qualification PFS (+ other) Designation

(Masters)

QCA 6/7

SCQF 10/11

Fellowship (10 papers) FPFS

(Degree)

QCA 5/6

SCQF 9/10

QCA 4/5

SCQF 7/8

Chartered/Associate APFS

Associateship (old 6 AFPC)

CFP / ISO

Diploma in Financial Planning (3 AFPC papers – old MSFA)

Dip PFS

QCA 3 -A Levels & Highers ( L6)

Certificate in Financial Planning

Cert. PFS (“old” FPC)

Qualifications and levels

The Stages

Qualifications

Advanced Diploma

Soft Skills

Diploma (AFPC)

FPC (CertPFS)

FP1

Tim

eli

ne

Le

ve

l o

f c

om

pe

ten

ce

1-2

yrs

2-5

yrs

ISO

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?