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TDQ: Passing AF7

18 March 2019

Catriona Standingford, MD of Brand Financial Training, looks at AF7, the exam with the lowest pass rate in 2018 and says it should be a tough paper

In 2018, the CII AF7 Pension Transfers exam had the lowest annual pass rate of all the Advanced Diploma AF exams (ignoring the discontinued AF3). At just 44.23%, this was only a slight rise from the 43.74% pass rate in 2017.

The AF7 exam is only a two-hour paper as opposed to the normal three hours for an AF paper, and it only gives 20 credits whereas the other AF units give 30 credits. So, you might think that in theory it should be an easier AF exam, particularly when you consider it is only ever going to be examining one specific topic. So why is the pass rate so low?

Given what a candidate can advise on when they have achieved this exam, it should be tough.

In October last year the FCA announced that the CII Level 4 Certificate in Pension Transfer Advice (made up of CII R01, R02, R04 and AF7) met the FCA requirements to be a pension transfer specialist. However, from 2020 all pension transfer specialists will have to hold the full qualification for retail investment advice. This means that for those that only have the Certificate in Pension Transfer Advice, they will need to get more exams under their belt. Those that already have the Diploma in Financial Planning or the Diploma in Regulated Financial Planning will not need to do anything extra.

The CII states that ‘the objective of the pension transfer qualification is to develop the specialist knowledge and skills needed for advising on the transfer of safeguarded benefits’. Pension transfers are in the news all the time and regulation is being updated regularly along with FCA consultations. Keeping up-to-date with the current legislation will be a key part leading to success with this exam.

A closer look at the exam papers

The first sitting of AF7 took place in October 2017, with further sittings in April and October 2018. Let’s look at those exam papers. Note that you can find them on the CII website.

One of the questions within Section A has been on the statutory transfer process which included the timescales and who is responsible for the various elements – clearly an important process and we suspect it would have been necessary for candidates to have produced a detailed and accurate answer to be awarded the maximum marks. For example, the trustees clearly have very specific responsibilities such as letting the client know they need to take financial advice (if necessary), setting a guarantee date and providing a statement of entitlement – all of these elements would need to be specifically explained along with specific timescales.

Also notable from the October 2017 exam guide and the examiner’s comments in particular, is that in one question candidates had to identify and explain ‘factors’ that had been given in the case study that were relevant to the pension transfer advice.

The examiner comments that many of the candidates wrote a list of generic terms of information that would be needed – and these gained nomarks. To gain good marks candidates needed to consider information given in the case study and pick out relevant elements. For example, ‘she has a low to medium ATR’, ‘she has limited investment experience’, ‘she wants to pass on assets to her children’.

To get the maximum marks on offer, candidates must pick out the relevant factors from the information given. This is standard testing of AF subjects so future students should ensure they practice this type of exam question.

Future AF7 candidates must ensure they are very precise with their answers and use all the past papers to make themselves familiar with the types of question being asked. They need to understand the process and be able to analyse the case studies in section B of the paper to explain in full why (or why not) the transfer should go ahead. If candidates get this right the pass rate in 2019 should improve.

Further information on exam questions can be found at https://brandft.co.uk

This article was published in the March 2019 issue of Professional Paraplanner

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