The size of the equity allocation has an impact on the  5  Recent research shows that the theory of purchasing power parity holds true to a greater extent than suggested by previous results. Cf. : Lucio Sarno (2011): Purchasing Parity in Tradable Goods, Working Paper for the Ministry of Finance  6  Report No. 15 (2010–2011) to the Storting: The management of the Government Pension Fund Global in 2010  6  BIS central bankers’ speeches  Fund’s return and risk and has increased from zero in 1996, to 40 per cent in 1998 and to the current 60 per cent allocation adopted by the Storting in 2007. The equity allocation was increased from 40 to 60 per cent in the period from June 2007 to June 2009. Norges Bank purchased NOK 1 trillion in equities for the Fund through the financial crisis, more than doubling the Fund’s total equity holdings. The owner’s adherence to the strategy through the period of decline in equity prices will undoubtedly prove profitable over time. A maximum of 40 per cent of the Fund is now invested in bonds and other fixed income instruments, which are usually associated with lower risk but also lower expected return than equities. Earlier this year, Norges Bank advised the Ministry of Finance on the design of the benchmark index for fixed income investment. The strategic benchmark index should reflect the role fixed income investment is expected to play in the Fund’s portfolio.
The recent launch of the FAA Learning Standards and the Finance Qualification Structure will facilitate the harmonisation and wider recognition of accredited professional learning programmes which will also be important for this industry to promote consistent standards in the professional development and mobility of its workforce. We have started to engage FAA, the industry and education providers on this initiative and are working towards the accreditation of mandatory core financial advisory training and examination modules in 2015, and continuing professional development programs progressively thereafter. To improve the alignment between the interests of consumers and financial advisers, we will be requiring all life insurers and family takaful operators to implement a balanced scorecard  2  BIS central bankers’ speeches  framework for the remuneration of agents and advisers, beginning with investment-linked products in the initial phase. We believe it is also important that such a framework is cascaded through to how financial advisory firms are rewarding their representatives. Incentives for individual representatives should be structured to promote impartial product advice, and investments in building enduring relationships with clients by providing the highest standards of professional service. The AFA will be expected to play an important role in driving this initiative through its guidance to firms on the operationalisation of the framework in the context of financial advisers. In the medium term, the Bank will examine the issue of the balance between fee-based and commission-based compensation for financial advisers more closely.