Kitemark

An international kitemark is being developed for financial advisers that would aim to provide a guarantee of quality and protect consumers from the kind of bad advice that led to the endowment mortgages and personal pensions mis-selling scandals.
The kitemark is being developed by the International Standards Organisation, a non-government body that oversees standard setting in 148 countries. It says the initiative will encourage advisers to raise standards and submit to independent assessments.
The ISO quality kitemark, used in the manufacture of goods ranging from light bulbs to machinery, would be the first agreed for the financial services industry anywhere in the world.
The licensing authority for the standard in the UK would be the British Standards Institute, which would judge whether advisers had sufficient experience to meet core competencies in managing clients' financial affairs according to current legislation rather than product sales targets.
There will also be a requirement to meet nine high-level ethical principles, such as behaving with integrity and managing conflicts of interest, and developing a values-led approach.
A six-step planning process would include factfinding to determine goals and expectations, an evaluation of financial status, a detailed plan, implementation of the recommendations
and monitoring the relationship.
A consultation document on the kitemark has been hammered out over the past three years by industry representatives, consumers and regulators from the UK and other countries.
David Jackman, head of the UK's Skills Council for Financial Services, said the kitemark scheme would form part of a series of professional advisory qualifications that includes the Financial Services Authority's examinations.
Mr Jackman, who is also a member of the ISO international technical committee on financial planning, said the proposal "allows independent financial advisers to raise their standards above regulatory minimums as a form of self regulation".
The ISO brand, the first financial services standard to be established internationally, will be particularly valuable for expatriates because it will create a minimum global standard.
Consumer groups have called for a kitemarking system after a series of scandals involving allegedly inappropriate advice. Millions of homeowners face possible difficulties in repaying interest-only mortgages because of the under-performance of investment-linked endowment policies.
The UK financial services industry has also paid out £14bn in compensation for mis-sold personal pensions.
The ISO will consult on the proposals until January 4. A follow-up paper is expected in the middle of next year before the proposals are finalised by the end of 2005.