Finance Monthly December 2019 Edition

All firms are required to ensure that their employees are competent, and remain competent for their role, but for those firms/individuals that are formally subject to the FCA’s TC rulebook, this provides more guidance around the components a firm might like to include. It is both the responsibility of the individual to meet the required standards laid down by the firm and for the firm to decide what those standards are. The TC rulebook itself helps firms focus on providing a structured T&C framework to those that need it. The T&C rules themselves detail the obligations on firms to ensure that their internal arrangements cover the full range of activities necessary to ensure individuals become and remain competent throughout their employment lifecycle with the firm. However, because T&C focuses on the individual and the activities they undertake in their role, the type and size of the firm the individual works for is unimportant in the eyes of the regulator. Therefore, whether the firm is a major global corporation or a relatively small SME is irrelevant from the perspective of T&C and ensuring employee competence. However, experience tells us that the larger corporations tend to have very structured processes, with frequent activities and assessments making up their T&C framework. Whereas much smaller advice firms will have a less structured approach to T&C mainly because it is likely that all staff are in one office location, with many of the team involved in each of the advice-giving processes. This raises differing conundrums for both large and small firms because, from a regulatory perspective, T&C is driven by services offered and not by firm size. Aligned to more principles-based regulation, the TC rulebook allows firms (within boundaries) to decide for themselves the type, level and complexity of the arrangements (which surely is a good thing?). In practice, however, the activities firms put in place to ensure employee competence in roles captured by T&C are largely the same. Firm Activity • Check experience & qualifications • Seek satisfactory references • Complete fitness & propriety checks • Establish competence gaps v intended role • Create training plans to ensure employee competence • Provide oversight of all internal processes • Educate individuals on the organisation, products and services • Induct individuals into the use of all related technology solutions • Provide input and test knowledge against relevant e-learning requirements • Introduce individuals to relevant customer journeys and accompanying process requirements • Ensure T&C activities are completed on time & to standard • Manage exceptions (breaches) • Ensure T&C supervisors are also qualified, trained, undertake CPD & are monitored • As above • Design T&C scheme, i.e. activities by stage, sign off procedures, exceptions processes etc. • Ensure governance & oversight • Produce & use MI to ensure compliance with TC Rulebook • Report annually to the regulator &, by exception, for breaches • Regularly review the appropriateness of the scheme & adjust as necessary Employee Activity • Provide qualifications & references • Attend employer induction programme as defined by employer and pass any relevant knowledge tests and/or skills-based assessments • Successfully complete T&C activities, CPD &, if necessary, qualifications • As above Stage of Employee Lifecycle Recruitment Induction Gaining Competence Maintaining Competence General 25 www.finance-monthly.com