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How Fit For Purpose Are Your T&C Arrangements? (Part 3) | Worksmart

Posted by Julie Pardy on April 3, 2019
Julie Pardy
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Appropriate and effective competence frameworks have been a regulatory requirement in Financial Services since the early 1990’s. The concept of T&C was introduced back in the early 90’s by LAUTRO and then refined by the PIA and FSA over the late 1990’s and 2000’s. More recently however, T&C has taken a bit of back seat to more recent regulation, such as MIFID II Knowledge and Competence requirements, the Insurance Distribution Directive and the Senior Managers & Certification Regime. However, these newer regimes all have the same underlying theme, and that is to ensure that organisations have structured and effective processes so that employees have the knowledge and competence necessary for them to fulfil their roles effectively. Therefore, whilst not necessarily grabbing the headlines, the concept of structured and effective T&C regimes remain at the forefront of our regulator’s approach to managing employee competence.

This series of three blogs is designed to help you review the fitness of your T&C or wider competence management arrangements. We aim to challenge you to consider whether your current approach is fit for purpose.

For ease, this third and final blog is laid out three sections, each focusing on a different aspect of the T&C scheme’s administration. For ease, each section is laid out as a series of questions and answers

If you missed the previous blogs in this series, click here;

How Fit For Purpose Is Your T&C? 

Training

 How are individual training needs identified and by whom?

Identifying the training needs for each role in the T&C scheme should start with the professional knowledge / qualifications required of that role. Professional bodies like the CII (Chartered Institute of Finance) and Chartered Institute for Securities and Investment (CISI) run both training programmes and provide qualifications. A second source of guidance is your professional trade body. Many trade bodies host interest groups on T&C that will enable networking and the opportunity to benchmark with other similar organisations. The third source of guidance should be your internal HR team. If you don’t already have the competency requirements defined for the roles in the T&C scheme, they should have the expertise to help you define what these are. HR should be a key resource for guidance on the competency requirements of each role beyond the core set of professional knowledge / qualifications. Once defined for each role, these competency frameworks form the basis for the identification of training needs that should be aligned by role. All that remains then is to organise any training needs in a logical sequence. On a final note, training needs can arise at any time and a key part to effective identification is supervisors who are trained and capable of not only spotting training needs but providing appropriate support to resolve them.

How are the learning objectives, timescales, responsibilities and measurements set defined for each training need identified?

This depends on the nature of the training needs. There is a great deal of discretion for firms to decide how they define and subsequently deliver their training. Professional bodies usually set annual standards for continuing professional development (CPD) for their members and many firms will also have their own in-house expectations too. These CPD requirements will often be split into structured versus unstructured learning. In fact, the FCA requires that retail investment advisers need to complete 35 hours of CPD each year. Successful completion of this CPD enables the individual to retain their Statement of Professional Standing (SPS). Beyond the CPD targets set by professional bodies, firms can and do set their own CPD requirements. This should be linked to the required measurements and timescales and be evidenced as part of the T&C Scheme arrangements.

In essence, any training identified should be noted via a SMART training plan that allows anyone looking at an individual’s development to be able to see when the need was identified, how will it be met and, when it is met, how will the change be measured.

What is in place to ensure training remains effective and up to date?

Training plans should be subject to regular review. There should be corporate training input that is managed by a central training team and typically will cover the provision of e-learning together with behavioural type inputs such as selling skills, handling difficult clients etc. Then you have the localised training that will tend to be managed by the T&C Supervisor. This is where small needs are identified through other T&C activities and then localised on the spot training is delivered to meet the need.  The trick here though is once again for a well-trained supervisor who can identify, manage and deliver against these needs, ensuring of course that everything is documented on the individual’s records, because if you can’t evidence it then in the eyes of the regulator it didn’t happen.

Who is responsible for ensuring training is timely, appropriate and evaluated?

At a localised level it is the T&C supervisor that needs to cater for the needs of the individual through either 1:1, group or referred training. Each training intervention should be evidenced through some type of Training Event Record that details what the training need is, what the proposed solution is and how this will be taken into the workplace. A structured approach of this nature then allows the T&C Scheme activity to be reviewed by the most senior overseer of the scheme to help ensure that training needs are either being met in the field or referred where a more formalised response is required.

How is training evaluated and by whom?

Who takes responsibility for making assessments about the competence and capabilities of individuals will vary across different organisations. However, responsibility for evaluating the effectiveness of training tends to fall to the staff member’s immediate line manager, dedicated T&C supervisors or, in some cases, a mix of both. Because whilst training is the input, the most effective way of evaluating its success is looking at the output and that means reviewing the individual whilst operational in role. The T&C scheme should define who assesses what activities and training will typically be evaluated at the point of delivery (by the training team) and at the point of use by the supervisory team.

 Download Our T&C Factsheet

 Exams

 How are exams requirements identified?

The place to start is with the T&C rule book which defines what roles require qualifications and what professional bodies offer what options. In some organisations, there will be a desire to define qualifications aligned to roles beyond the strict regulatory requirements. In these instances, the firm should make their own decisions about how far to take the requirement for additional qualifications. However, whichever route a firm chooses, once a requirement is built into the T&C and wider competence arrangements, the firm will need to have an effective mechanism to manage individuals against these defined standards.

How is the most appropriate exam identified?

As noted above, the FCA have defined whether roles covered by the T&C regime are subject to qualification requirements or not. This data is published as an appendix to the TC rulebook:

https://www.handbook.fca.org.uk/handbook/TC/App/4/?view=chapter

How do generic requirements complement other knowledge requirements?

Having a solid understanding of the knowledge requirements of a role is the foundation stone that everything else is built on. However, knowledge alone does not make an individual competent. Other competencies, e.g. people skills, organisation skills etc., are equally important in the make up of a fully competent individual. In this context, typical T&C activities, such as customer observations, are a great way of not only assessing regulatory competence, but also assessing interpersonal skills. Also ensuring that any generic role requirements are noted at outset will help both the individual and those involved in their training pathway to ensure that input is appropriate to the role that the individuals is fulfilling.

What arrangements are in place to address any failure to meet timescales?

All T&C schemes will have a range of activities that must be undertaken. Each activity should have a defined timescale in which it should be completed and part of the governance of a firm’s T&C regime should be oversight of what is being completed and by when. Where it is identified that activity is not being undertaken to time and/or to standard, then clear guidance should be in place within the scheme as to what the implications of non-adherence are.  And just as importantly, what the steps are to remediation.  Many schemes will run an “exceptions process” whereby a supervisor will notify the T&C Manager where there is likely to be a breach due to holiday, sickness, workload etc and will ask for an extension. This is usually allowable on the basis that it shows someone is in control and managing the day to day requirements of the scheme.  The logic being better to allow a supervisor some flexibility to manage unforeseen circumstances that to allow supervisors to trip over and miss deadlines even when they know they are going to do so.

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 Record Keeping

 How are record keeping requirements determined for your T&C scheme?

The FCA defines what the minimum time periods are for the retention of records in respect of Training & Competence;

https://www.handbook.fca.org.uk/handbook/TC/3/1.html.

However, it’s worth noting that whilst defining the retention period, no formal guidance is given on record types. They leave this as a matter for the firm. However, any T&C records should be retained together with the supporting MI that is helpful and useful for retrieval purposes. Ask yourself the question, if my T&C scheme for example covers 100 staff, who have been with us for over 5 years and therefore are likely to have a multitude of interventions undertaken with them, how will I easily extract relevant data should I need to.  If that question currently is “it’s going to be really difficult, even impossible” then you might like to consider an on-line solution.

 How are records being used for the benefit of the firm and its employees?

Records should be both an evidential record of an individual’s adherence to the requirements of the T&C scheme and provide a prompt for up coming activity. They should show the story of an individual’s development through both the scheme and in their role. It should show the input that the firm has provided and how the individual has performed against it. It should be in a format that the individual can (if required) take to any future employer. Ask yourself the question, if your employee asked to take a copy of their T&C scheme history with them to their new employer and they had been with you for 3 years, how easy would that be. In many instances this type of request strikes fear into the firms that run manual processes, as this would be a huge task. Think how easy this could become if you were to formalise your T&C arrangements via an online management tool.

Together with the two previous blogs, we hope this blog has provoked thought on your approach to T&C within your organisation and provided some insights into how you can refine the T&C arrangements within your organisation.

Download Our T&C Factsheet 

 

 

 

 

 

 

 

Topics: SM&CR

Five key questions you need to answer for yourself in readiness for the SM&CR regulation:

  • Do you understand the full implications of the new regime?
  • Have you considered the impact of the regime on your business and your staff?
  • Do you understand the impacts of embedding the regime into business as usual?
  • Does your organisation appreciate the value of future proofing your systems and processes?
  • Are  you confident in your existing systems and processes to deliver SM&CR compliance?

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