Training and Competence - Why it Matters

RWA recently worked with Ecclesiastical Insurance to deliver a webinar on how to establish a robust training and competency framework. It covers FCA requirements, defining competence standards, KPIs and embedding a T&C framework within your business. Go here to watch the webinar in full: https://www.ecclesiastical.com/brokers/training/training-competency/

----

So what is training and competence, and why does it matter?

The FCA’s training and competence regime supports consumers by making sure the financial services workforce is appropriately qualified and regulated.

Individuals must have appropriate qualifications, be assessed as competent by their firm, maintain competence through training and meet certain standards of behaviour.

How competent are your employees?

How competent are you and your employees, and how do you know? These are probably the first two questions the FCA would ask if it visited.

Firms should keep thorough records of anything training and competence related in order that this can be evidenced to the regulator. Such records might include details of appraisals, qualifications, assessments and CPD.

It is worth remembering that CPD is a regulatory requirement – under the Insurance Distribution Directive (IDD), all staff involved in insurance distribution are required to complete 15 hours’ CPD per year, demonstrating the minimum necessary knowledge, relative to their role, across eight core competencies. These are:

  • Understanding policy documents
  • Financial competence
  • Claims handling
  • Complaints handling
  • Assessing customer needs
  • The insurance market
  • Business ethics standards
  • Applicable law

The FCA has linked poor customer outcomes to employee competence, as employees who are not competent are at greater risk of giving incorrect advice and causing customer harm. In serious cases, this may even result in reputational damage or enforcement action for your firm.

Conduct and Culture

In recent years, the FCA has increased its focus on raising standards across financial services and preventing customer harm. Introduced to FCA solo-regulated firms in December 2019, the Senior Managers and Certification Regime (SM&CR) aimed to increase personal accountability and improve conduct at all levels. There are three key elements of SM&CR, which are:

  • The Senior Managers Regime;
  • The Certification Regime; and
  • The Conduct Rules.

All relevant staff must be trained on the Conduct Rules and how these apply to their roles. A Senior Manager should be allocated the Prescribed Responsibility for oversight of this.

When thinking about the culture of your firm, consider what good looks like across: knowledge, skills and ethical behaviours. These can then be built into your KPI and competence sets. This will then further help you to identify strengths, weaknesses, risks and gaps.

How difficult is it to write a T&C scheme?

It is not difficult to write a T&C scheme, but it is difficult to write one that fully supports, develops and assists in good outcomes for customers. Every firm is different, so there’s no ‘one size fits all’ approach. Some of the elements involved include: constructing the scheme in the first place, who will have responsibilities within the scheme, adequate spans of control, record keeping, KPIs and ensuring it is effective in assisting staff to achieve and maintain competence.

Firms should check in with their staff on a regular basis to set out achievable targets and to make sure everyone is keeping up. Ensure that these individuals have the appropriate learning and development opportunities, included within any T&C scheme.

For more information on the T&C rules, please click here: https://www.handbook.fca.org.uk/handbook/TC/

For more information or just a chat, please contact your Business Manager or the team at RWA via 01604 709509 or helpdesk@rwagroup.co.uk.

About the author

Kirk joined RWA in 2015, having worked in the financial services sector for many years. He started out in both the general insurance and mortgage advice arms of HSBC, before becoming the Compliance Officer at Go Compare and Training & Competence Manager at Optimum Credit. 

At RWA, Kirk is Deputy Head of Compliance. He supports RWA clients by looking after their compliance, training and competence needs and keeping them up to date with regulatory changes. He promotes the achievement of fair customer outcomes and specialises in designing and implementing T&C schemes for firms of all sizes.

Get RWA Insight In Your Inbox

Regular business news and commentary delivered direct to your inbox each week. Sign up here