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Testing times

Nobody enjoys exams but qualifications do more than please the FSA – they boost brokers’ skills and develop their businesses, says Mark Roberts

Testing, testing, one, two, three.” This used to be the kind of thing that was only heard at recording studios and rock concerts but is now increasingly common in the financial advice market.

Wherever you look, regulators and practitioners are demanding new tests and examinations, and bodies such as the Institute of Financial Services, the Chartered Institute of Insurers and the Chartered Institute of Bankers in Scotland are bringing qualifications to the market.

Unsurprisingly, there are those who question the validity of having so many exams, claiming that taking them is a waste of time that could be better spent in front of clients and running businesses. Indeed, it was only a few years ago that no formal qualifications were required to be a mortgage broker and some feel the statutory regulations are symptomatic of an unnecessary Big Brother regime.

But the bottom line is that no matter how much some may disagree with exams there is no question of them being done away with. They provide a benchmark against which the regulator can assess the standard of practising brokers, evidence of ongoing training and competency and a consistency of standards across the industry.

Exams are central to the Financial Services Authority’s aim of providing protection to the public in its use of the financial markets and, if anything, are likely to be developed further to provide a more detailed picture of standards in the market.

Despite their moaning, the irony is that exams are not a hindrance to brokers looking to grow their businesses but rather a means by which they can develop the areas in which they operate, instil confidence in their clients and protect themselves against complaints.

In the past, brokers tended to focus on a single part of the market and stick to it. Yes, there are still specialist brokers dealing only with areas such as lifetime mortgages or buy-to-let cases but there is no reason why those operating in the mainstream market should not give advice to clients looking for lifetime, buy-to-let, or sub-prime products.

These clients may not be the mainstay of an adviser’s business but turning them away or introducing them to another company is ignoring a wonderful opportunity to create a secondary revenue stream.

It may have been true years ago that dealing in these secondary markets required specialist knowledge and an intimate relationship with lenders so as to understand their systems and requirements. Clearly, knowledge “

of the sectors is still required but it has become easier to deal with lenders as they have begun to standardise their application forms and make themselves more accessible.

Sourcing products in these markets has also become easier as the sourcing systems have become more sophisticated and the technology involved more capable of delivering on wider reaching criteria.

So with access to these products greatly improved, brokers have only to concentrate on acquiring the knowledge needed to service them.

This is where examinations come into their own. Not only do they provide a structured route through the technical knowledge required but they also give a practical understanding of how it is applicable.

Even a cursory look at how the buy-to-let, lifetime and overseas mortgage markets have opened up recently will show there are opportunities out there.

The overhaul of pension legislation is also set to give mortgage advisers a boost, but to reap the rewards they must position themselves correctly to advise clients placing residential property into a self invested pension plan.

Earlier this year, exams focussing on the lifetime mortgage market became available and a great many brokers have now taken advantage of these. This month, further qualifications are to be offered which will provide brokers with the chance to develop their skills over a wider range of areas. No longer are the exams offered simply threshold qualifications allowing brokers to trade. They have been designed with the purpose of helping advisers grow their skills and develop their businesses.

Exams should hold no fear for brokers. All the exams offered by the IFS, CII and CIOBS are multiple choice-based and look to confirm that the required knowledge is in place rather than catch advisers out with trick questions.

CIOBS has weekly sittings for its exams at centres throughout the country, while the CII provides sittings for its exams on a quarterly basis. Results are made available a few weeks after the test date. In contrast, the IFS uses the centres operated by the DVLA for those sitting theory papers. This allows advisers to go to the most convenient centre, take the test and receive their results before they leave.

All the exams are modular, with a certain number of modules required “This month, further qualifications are to be offered which will provide brokers with the chance to develop their skills over a range of areas”for entry-level exams such as the Certificate in Mortgage Advice and Practice, CeMAP (IFS), the Certificate in Mortgage Advice (CII) and the Mortgage Advice and Practice Certificate (CIOBS). For advanced mortgage advice qualifications, other modules have to be taken which complement learning already in place.

Most brokers will have a good knowledge of the sector in which they operate and are likely to have a working knowledge of other areas of the market so few coming to a new module will be completely in the dark. It is recommended that the study time for a module is around 40 hours. For brokers looking to work this into their weekly schedule, a half hour slot at the end of each day will cover it in 16 weeks.

Costs to sit the exams and buy the study materials vary, with a slightly different approach taken by each of the exam bodies.

Brian Roberts of Brian Roberts Financial Services, based in Craig-y-Don, Llandudno, is 55 and has been in the financial advice industry since early 1967. The old adage about not being able to teach old dogs new tricks certainly does not apply to him. He passed FPC I, II, III in the mid-1990s but was keen to demonstrate his knowledge on mortgages and the Institute of Financial Services came up trumps with CeMAP in 1997.

He passed the CeMAP Bridge paper when it first came out in 1998 and did the Certificate of Regulated General Insurance with IFS. He was the first to pass that and was also the first to pass the Certificate in Lifetime Mortgages.

Over the years, Roberts has shown quite an appetite for further learning and qualifications and is not yet satisfied. There will be a new exam from the IFS called Advanced CeMAP coming out this autumn and, yes, Roberts is keen to study for it too. His aim is to prove to his clients that he is fit to do the job and also to show the Financial Services Authority that he is maintaining his training and competency levels.

While many of the exams Roberts has taken over the years were voluntary at the time, they have since become mandatory for advisers and Roberts feels keeping on top of them has made life easier for him as well as helping him stay ahead of the game.

Roberts says taking the exams has not been difficult in terms of studying, and by reading and talking with people in the industry he has kept up-to-date with what is happening in the market – even in areas in which he does little or no business.

He dispels the notion exams should hold any fear for advisers, saying he has had no great problems. and he thinks they are here to stay, believing advisers are always learning something and exams demonstrate to clients that brokers are up-to-date when it comes to product knowledge and regulatory and legislative change.

Nobody likes exams but this is no reason for ignoring them. It is the successful companies and individuals that lead the way in training, competence and self-advancement. This is no coincidence.

Those wishing to follow their lead may have work, but this will pay dividends in the eyes of both the regulator and the paying customer.

Mark Roberts is head of faculty financial regulation at the Institute of Financial Services


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