The BS ISO 22222:2005 (Requirements for personal financial planners) Standard Explained

4 years ago

The BS ISO 22222:2005 (Personal financial planning. Requirements for personal financial planners) standard is the first standalone high level standard for the personal financial planning (PFP) sector.

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Although commonly perceived as a product, the standard is about two things, namely qualifications and competency levels, and how practitioners should behave when undertaking PFP. Standardisation is essential for the Personal Financial Planning (PFP) sector in order to meet the changing needs of consumers and the public as a whole.

This standard is the first of its kind, and the process will be closely monitored by the European Union. As market leaders and a growing sector, the success of this standard will prove instrumental in lobbying for wider statutory regulation across the personal finance market, rather than some of the less ambitious alternatives being considered by the EU.

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The rules and standards themselves are reasonably straightforward and are used as a basis for three key regulatory documents:

  • The Advanced Diploma – The key target qualification for all PFP practitioners. It is targeted to 3rd degree undergraduate level. The diploma is awarded by Achievement Solutions, and can be undertaken at all levels and in all formats.
  • The advanced Diploma in Financial Planning (Diploma in Personal Finance Planning) – Specifies the curriculum requirements of the Advanced Diploma, and is based on the British Computer Society’s Diploma in IT Operations (ITIL) giving the Diploma holder a significant competitive edge in financial planning activities. Awarded by the Open College Network.
  • The Intermediate Diploma – This is the next step in the progression to the Advanced Diploma. It is based on a number of examinations and empirical study. It is a requirement for most employers of qualified personal financial planners. Awarded by the Open College Network.

What is the BS ISO 22222:2005?

The BS ISO 22222:2005 (Personal financial planning. Requirements for personal financial planners) standard is now officially a ‘British Standard.’

This is the first standalone British Standard for the personal financial planning (PFP) sector.

The standard has been written by the PFP Planning Standards and Accreditation Council (PSAC), a non-profit body which has been formed to promote the adoption of the standard.

It is the first high level standard for the PFP sector. It focuses on providing the framework for a competent practitioner.

Those thinking about becoming a PFP should begin by taking the qualification endorsed by this standard.

Which groups have been consulted?

Since 1999, the Personal Financial Planning Planning Standards Accreditation Council (PSAC) has consulted extensively with a wide range of organisations.

These include:

  • The Charity Standards Board
  • The Association of Chartered Certified Accountants
  • The British Computer Society
  • The Financial Planning Association
  • Consumers’ Association (Consumers’ Association and the National Association of Citizens Advice Bureaux)
  • The Institute of Financial Planners
  • Association of Independent Financial Advisors and the Association of Financial Advisors
  • Association of British Insurers
  • The Association of Retirement Housing Managers (ARHM)
  • The National Savings & Investment Management Service Ltd
  • The Investment Management Association (IMA)

Why should your business adopt the BS ISO 22222:2005?

The Leading Financial Planners in the UK (CIPFA 2007) has reported that PFP is a rapidly growing inter-disciplinary practice area. The growth of PFP is driven by an increasing demand for advice from consumers.

The market is set to expand because investors are becoming increasingly dissatisfied with financial service providers’ (FSPs) sales based approach and want more value for money. This is particularly true for those planning to retire, those on the threshold of retirement, or who are in retirement. It is also true for small investors.

The BS ISO 22222:2005 is an ideal opportunity for advisers to demonstrate that they have the appropriate standards and competence.

People want to engage with a competent professional who understands their needs. The PFP practitioner should exercise skill and judgment in delivering value for money advice, and should provide a holistic approach to PFP. A skilled PFP practitioner should be able to encourage saving and investing to support personal financial objectives, and manage financial risks in order to meet lifetime needs.

The PFP industry is still seen as new, although it does have a long history. Consumers, financial service providers and the wider public are increasingly aware of the need to actively manage their finances and save effectively for their retirement or other future needs.

So far, PFP has been mainly operated to a high level of competence, but it has not been widely formalised, even though PFP is a growing industry. There has been a need to regulate more effectively the growing number of financial advisers in the UK in the interests of practitioners, consumers and the wider public.

The ISO 22222:2005 Standard is the first benchmark to define what constitutes ‘Personal Financial Planning’.

Consumers know what they want and are aware that they need to save. They want the right advice to maximise their savings and make the most of their hard earned savings. The PFP industry has accelerated in the past few years, and will continue to expand. Increasingly, consumers are realising that they should get a holistic advice on what to do with their money, and how to get the best financial outcomes for them, their families and their plans.

The ISO 22222:2005 Potential

The BS ISO 22222:2005 offers the first benchmark for the PFP sector, and it is relevant to any organisation that provides financial advice. This is a clear statement of the standards practitioners should meet and uphold. Clients of FSPs can also use the standard as a measure of the reliability and integrity of the PFP services they receive.

The BS ISO 22222:2005 is designed to be the foundation for PFP education and training, and can be used by educational institutions to set their PFP programs’ objectives.

How the standard came about

The process of setting up the standard was led by a planning standards and accreditation council (PSAC). This is a non profit body that was created to promote high standards in the personal financial planning profession, and a market wide understanding of how best to design personal financial planning courses.

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