Senior members of the investment advice community in the UAE are advocating for minimum qualification and certification levels for advisers – in line with the Insurance Authority’s proposed regulations.
The UAE Insurance Authority has published draft regulations consolidating rules on insurance broking, online broking transactions, appointment criteria and qualifications for top positions in insurance broking companies and investment advisers.
It prescribed criteria for filling positions including chief executive, operations manager, compliance officer, specialist or professional staff, branch executives and sales staff.
Most advisory firms in the UAE are taking steps to abide by the Insurance Authority’s norms for deploying qualified advisers.
They prescribe minimum qualification or certification levels for financial advisers in the wake of increasing competition and complaints.
There has been rampant mis-selling of investment products, putting the reputation of many investment advisory firms at risk.
The draft regulations had proposed curbing the untrained specialists who sell investment products after the regulator received a number of complaints from residents about mis-selling, hefty commissions, upfront fees and surrender charges for savings products collected by investment advisers.
Dearth of quality advisers
On the issue of prescribing minimum qualification and certification for financial advisers, Navin Nihalani, founder and chief executive, Compass Insurance Brokers, said: “That’s the first step that should be implemented.
“Experience can also be allowed as a replacement for the same initially. But a continued education programme should be implemented which is the need of the hour and it should be linked to individual adviser licensing by the regulator.”
Nihalani had said there was an absolute dearth of quality advisers and it’s time the industry implemented standardised qualifications.
“The new draft may have both pros and cons. If implemented, this could do good for the industry. But they should allow experience as a replacement for education in some positions. Also they should not restrict life and GI sales people to do both activities as long as they are qualified to do both,” he said.
Krishnan Ramachandran, chief executive of Barjeel Geojit Financial Services LLC said, on top of prescribing minimum qualification and certification, advisers must undergo a minimum period of internship and acquire experience before they start advising clients.
Ashok Sardana, managing director of Continental Insurance Brokers, is of the view that investment firms should hire only qualified people who want to service their clients. He agreed with others and suggested that advisers must have qualifications before offering any financial solution.
“It should be mandatory for all advisers to be qualified to some level to provide advice as they are dealing with people’s life savings and retirement funds, and therefore firms cannot have non-qualified advisors advising people.”
CII’s training help
Gaenor Jones, regional director of the Chartered Insurance Institute (CII), said: “Those companies who continue to value the importance of regulation and who support their employees in their attainment of professional qualifications will continue to prosper.
“Ideally, the HR function should be putting robust and appropriate training plans in place for their employees so that they have achievable time-considerate objectives to meet, enabling advisers to study and attain qualifications without any negative impact on their day-to-day obligations,” she said.
“We fully endorse and support any drive to raise professional standards in the financial planning and insurance sectors, and that endeavor starts with encouraging advisers to attain minimum qualifications on which they can build a wealth of tailored qualifications appropriate to their career path and chosen areas of expertise,” she added.
CII is working closely with HR professionals to identify needs and address the requirements, before providing relevant study materials and examinations. The institute offers a wide array of qualifications for the insurance and financial planning sectors.
These are available in both English and Arabic and are appropriate for both newcomers to the sector, as well as more senior stalwarts.
