Mandatory CFA Level 1 passes for all front office bankers?

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Results to December's CFA level 1 exams are out. They confirm that the CFA Level 1 is hard: globally only 36% of the people who took it passed.

With claims still circulating that the financial crisis was perpetrated by the ineptitude of its financial services participants, is it time to start using the challenging CFA Level 1 as a screening device? Should admission to front office roles be contingent on a pass?

Some people think that yes it should.

"The CFA is very relevant and extremely challenging," says one senior trader who passed it recently. "I don't consider myself to be thick and I found it hard work - far harder than the other exams on the market. I could take 5 Chartered Institute for Securities and Investment Exams for every level of the CFA."

Contrary to popular perception it's no longer mandatory to pass exams if you're working in a bank in the UK and are dealing only with wholesale customers. The FSA scrapped the wholesale exam requirement several years ago.

A spokesman for the regulator says there's no plan to reinstate this. However, as part of its 'retail distribution review,' the FSA is increasing the difficulty of the exams it requires bankers dealing with retail clients to pass. Some say the uneven treatment of investment bankers doesn't make sense.

What the CFA will teach you

Steve Wellard, spokesman for the CFA in the UK points out that the CFA exams cover a broad syllabus teaching all areas to do with investment principles, asset management, economics and financial reporting.

"It's almost like a masters in finance geared towards investment management," he says.

Although the CFA is most suited for people working in asset management or equity research, Wellard says it's increasingly taken by traders and salespeople too.

The senior trader who took it recently tells us he's definitely been a beneficiary. "I've been in trading for more than 20 years and I still learned an awful lot. It's easy to become very narrowly focused and this forces you to look at the bigger picture."

Pass rate problems

The main issue with instigating the CFA has a minimum front office requirement would obviously be the pass rate: would banks really want to ding two thirds of their graduate class when they failed?

Wellard says this would surely be appropriate: "The implication would be that two thirds of your graduate class weren't going to be good enough."

In reality, however, he says the pass rate would likely be far higher were the CFA mandatory for front office roles in London: "There's already a bias towards higher pass rates in Western economies."

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