Training and Competence (T&C) will shortly have its coming of age. This has involved almost 18 years of development from the days of its infancy when we had to divide up our company representatives under LAUTRO’s requirements into categories A B and C. This meant entire sales forces being taken off the road for retraining and when the role of the T&C supervisor was the filling in the sandwich between compliance and the sales force.
And in the future we have an increasing number of challenges facing intermediary firms of all sizes. Yet despite this ‘coming of age’ have things really moved on? Just a few months ago, FSA chief executive Hector Sants, when addressing the Reuters Newsmakers conference on 12 March and, speaking of the resource and T&C requirements of his own staff, said: “by the end of 2009, we will have 280 extra specialist and supervisory staff which will represent a 30 per cent increase in our supervisory capacity. To ensure these individuals are properly equipped to do this job we have introduced a new Training & Competence scheme which involves a regulatory testing regime for existing supervisors. We have also ensured that we have the right mix between professional regulators and market practitioners.”
I’m sure he cannot have meant it the way it sounds, because surely the FSA would be leading by example and already have a suitably robust Training & Competence scheme in place, enhanced by the right balance of regulators and practitioners!
Integral
However, it does go to show that T&C is not the ephemeral add-on which was the bane of our company representatives’ lives at birth and has transformed into an integral part of running a business properly and professionally. The move to principles-based regulation has helped this, as companies now have to take a mature appropriate and proportionate decisions for their company’s professional standards for all staff instead of limiting it to the basics required by the regulations. For example, in the days of T&C infancy we generally applied the regime to the minimum that we could get away with – just to the customer facing sales representatives. Then as time progressed we began to embrace the benefits of having a well trained, knowledgeable, skilled and competent back office and extended training there.
There remain two areas which exercise my mind on T&C issues – one relates to the “annual sheep-dipping” approach that is needed on statutory or desirable training areas such as anti-money laundering, treating customers fairly, data security and diversity. This can be a real trial for trainers and staff alike as it is often hard to say something new and unusual. We have started experimenting with immersive gaming using the latest technology to turn these learning experiences into fun games with real life scenarios. The staff love them, they deliver all the learning outcomes and provide evidence on our learning management systems that the training has been delivered and the scores attained.
Immersive learning is certainly one way that technology can provide an engaging, exciting yet realistic simulation to communicate a range of FSA principles by stepping outside of the textbook to stimulate the interest of all learners. Indeed by adapting a gaming mentality immersive learning can provide learning solutions for all firms who are serious about such areas and wish to ensure all their employees understand their personal responsibilities.
RDR
The second area causing some sharpening of one’s regulatory attention at the present is the RDR and the potential knock-on implications for all firms be they mortgage brokers, IFAs, stockbrokers or asset managers. The key here is to make sure firms are aware of any changes in policy and, if applicable, do not leave any action until the last minute.
There are constant reminders being issued by the FSA about such matter and about the overall importance of firms not losing focus on their regulatory responsibilities. This has been illustrated by the regulator handing out a record 55 fines in the year ended 31 March 2009, according to figures from city law firm Reynolds Porter Chamberlain. It added that the FSA also prohibited more individuals or firms, 46 in total, from carrying out regulated activity than in all previous years put together. The research from the law firm also shows that the average fine handed down by the FSA in 2008-9 amounted to £497,000 compared with £212,000 in the previous financial year. Even after taking out fines handed out worth more than £1 million, the average fine still increased 20 per cent from £111,000 to £133,000.
Supervision
There is no doubting that the FSA will continue keeping a close watch on firms via its day-to-day supervision. T&C assessments remain a vital element in proving an adviser's competence and maintaining valuable management information. Competence essentially means having the skills, knowledge and expertise needed to discharge the responsibilities of an adviser's or supervisor's role and this includes achieving a good standard of ethical behaviour.
In terms of financial services there is often a tick box mentality attached to most areas in the learning of regulatory requirements. The use of technology however, can ultimately help to raise the bar by aiding the relevant parties in getting up to speed with these initiatives and requirements. It can also help form a greater understanding of practical scenarios to boost performance both in how individual businesses work and from a regulatory perspective.
There is no doubting that Training and Competence is here to stay but in more integrated and sophisticated ways for the benefit of the entire workforce, our clients and shareholders alike. Advisers across all sectors need to embrace it or simply become another FSA statistic.
