In his recent speech to the Outsource Services Group Conference, Bernard Sheridan the Assistant Director General for Consumer Protection in the Central Bank of Ireland  announced that there have been developments with reorganising the functions of authorising and regulation of the Investment Business arena, and it seems that things have gone full circle with the single unitary organisation being the Central Bank of Ireland, which once again has the responsibility for the supervision of investment business firms, and the stability of the financial system.

The consumer information and educational roles that had been carried out by the Financial Regulator have been transferred to the National Consumer Agency.

There are hints in his speech that there will be changes on the regulatory and enforcement side of the house also, which  will include a closer working environment with other consumer bodies such as the Financial Services Ombudsman and the promise of a strengthened Consumer Protection Code to be published by the 30 June 2011.

The Code, he indicates is likely to introduce additional measures to monitor and control verbal interaction with the consumer, cold calling, more straightforward risk warnings, and the consideration of holding the product manufacturers responsible for the defects and inadequate disclosures as well as imposing ongoing product reviews to ensure that products are meeting and continuing to meet the needs of their target audience.  In addition to this there is likely to be ongoing improvements to the transparency and remuneration in respect of charges and fees.

Changes to the Minimum Competency Requirements – CPD and Grandfathering

In addition to the changes outlined above Mr Sheridan also seemed to quantify that the proposals which were outlined in Consultation Paper  45 (which was put out to consultation over the summer period ) in respect of Continuing Professional Development (CPD) hours and the phase out of ‘Grandfathering’ of experience, will be implemented over the coming months.

In respect of CPD he indicated recent monitoring visits have indicated that CPD record keeping needs to be improved and confirmed that, depending on the activities being conducted, there will be a minimum requirement of between 15 and 30 structured hours per annum, however this will be coupled with the ability to combine CPD in the common areas such as legislation or regulation.

Consultation Paper 45 more than hinted at the fact that Grandfathering had a limited shelf life and Mr Sheridan’s forthright language now indicates that it will be phased out over a four year period with all of those who have availed of this route now being expected to have obtained and be holding a recognised qualification by 2015 if they wish to undertake investment business activities.

Whilst this may be aimed at bringing up the standards of the industry it will no doubt have an impact on accountants in practice who have availed of this route to obtaining ‘Accredited Individual’ status will now have to go out and obtain a recognised qualification whether it be from the LIA , the Institute of Bankers, the Insurance Institute of Ireland or the Irish Brokers Association.

As I indicated in my article in August  none of the accountancy bodies obtained a recognition of their qualification under the Minimum Competency Requirements yet these bodies and their members   have at least equivalence with the Codes established by the Financial Regulator, and in many instances have higher and more stringent  requirements in relation to not only fiduciary responsibility to their clients but also must apply all encompassing Codes of Ethics and Investment Business Regulations.  

Can further changes be expected in this area in the future?  Is this the start of the end of self regulation in Investment Business for the Approved Professional Bodies (APB’s)?  If members of the accountancy bodies are going to have to sit examinations provided by the Accredited Bodies to be able to continue to give advice one would wonder whether they will continue to remain under the constraints of the incidentality requirements which are applied to APB authorised firms which limits the income derived from investment business activities to 20% or less of the firms gross fee income and restricts the way in which a firm can advertise its investment business services.

Michelle Kane OmniPro

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E-mail -mkane@omnipro.ie

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