Competence

Part

TC Training and Competence

Chapter

Competence

Printed on: 01/11/2024

Rulebook at: 31/12/2012

TC 2

Competence

TC 2.1

Assessing and maintaining competence

01/01/2011

Assessment of competence and supervision

TC 2.1.1

(1) A firm must not assess an employee as competent to carry on an activity in TC Appendix 1 until the employee has demonstrated the necessary competence to do so and has (if required by TC Appendix 1) attained each module of an appropriate qualification. This assessment need not take place before the employee starts to carry on the activity.
(2) A firm may assess an employee who is subject to, but has not satisfied, an appropriate qualification requirement as competent to the extent that:

(a) that employee works in a branch in an EEA State other than the United Kingdom;
(b) the employee is engaging in MiFID business; and
(c) there is no appropriate qualification or equivalent in that EEA State.

01/01/2011

TC 2.1.2

A firm must not allow an employee to carry on an activity in TC Appendix 1 without appropriate supervision.

01/11/2007

TC 2.1.3

Firms should ensure that employees are appropriately supervised at all times. It is expected that the level and intensity of that supervision will be significantly greater in the period before the firm has assessed the employee as competent, than after. A firm should therefore have clear criteria and procedures relating to the specific point at which the employee is assessed as competent in order to be able to demonstrate when and why a reduced level of supervision may be considered appropriate. At all stages firms should consider the level of relevant experience of an employee when determining the level of supervision required.

01/11/2007

Supervisors

TC 2.1.4

Firms should ensure that those supervising employees carrying on an activity in TC Appendix 1 have the necessary coaching and assessment skills as well as technical knowledge and experience to act as a competent supervisor and assessor. In particular firms should consider whether it is appropriate to require those supervising employees not assessed as competent to attain an appropriate qualification as well except where the employee is giving advice on retail investment products, see TC 2.1.5 R.

31/12/2012

TC 2.1.5

Where an employee is giving advice on retail investment products to retail clients and has not been assessed as competent to do so, the firm must ensure that the individual supervising and assessing that employee has attained an appropriate qualification.

31/12/2012

Qualification requirements before starting activities

TC 2.1.6

A firm must ensure that an employee does not carry on an activity in TC Appendix 1 (other than an overseeing activity) for which there is a qualification requirement without first attaining the relevant regulatory module of an appropriate qualification.

01/01/2011

TC 2.1.7

A firm must ensure that an employee does not carry on any of the following activities without first attaining each module of an appropriate qualification:

(1) [deleted]
(1A) advising on and dealing in securities which are not stakeholder pension schemes, personal pension schemes or broker funds;
(1B) advising on and dealing in derivatives;
(2) the activity of a broker fund adviser;
(3) advising on syndicate participation at Lloyd's; or
(4) the activity of a pension transfer specialist.

01/10/2011

TC 2.1.8A

A firm must ensure that an employee who was assessed as competent as a retail investment adviser for the purposes of TC 2.1.1 R at 30 June 2009 does not carry on the activity of a retail investment adviser without first attaining an appropriate qualification.

31/12/2012

Exemption from appropriate qualification requirements

TC 2.1.9

(1) If a firm is satisfied that an employee meets the conditions in this rule then the requirements to have attained each module of an appropriate qualification will only apply if that employee is carrying on one of the activities specified in this rule.
(2) The conditions are that a firm should be satisfied that an employee:

(a) has at least three years' up-to-date relevant experience in the activity in question obtained while employed outside the United Kingdom;
(b) has not previously been required to comply fully with the relevant qualification requirements in TC 2.1.1 R; and
(c) has passed the relevant regulatory module of an appropriate qualification;

but (b) and (c) do not apply to an employee who is benefiting from the "30-day rule" exemption in SUP 10.10.7B R, unless the employee benefits from that rule because he is advising retail clients on retail investment products or is a broker fund adviser.
(3) The relevant activities are:

(a) advising on investments which are retail investment products, if that advice is given to retail clients;
(b) the activity of a broker fund adviser;
(c) advising on syndicate participation at Lloyd's; or
(d) the activity of a pension transfer specialist.

31/12/2012

Selecting an appropriate qualification

TC 2.1.10

(1) This rule applies for the purposes of TC 2.1.1 R, TC 2.1.5 R, TC 2.1.6 R, TC 2.1.7 R, TC 2.1.9 R, TC 2.2A.1 R, TC 2.2A.3 R and TC 2.2A.6 R.
(2) To ensure that a qualification is appropriate, a firm should select an appropriate qualification from the list of qualifications set out in TC Appendix 4E.
(3) Contravention of (2) may be relied on as tending to establish contravention of the rules referred to in (1).

01/01/2011

TC 2.1.10A

TC Appendix 5G sets out:

(1) the criteria which the FSA may take into account when assessing a qualification provider; and
(2) the information the FSA will expect the qualification provider to provide if it asks the FSA to add a qualification to the list of appropriate qualifications in TC Appendix 4E.

01/01/2011

TC 2.1.10B

(1) TC Appendix 6G sets out guidance in relation to accredited bodies.
(2) TC Appendix 7G sets out guidance on gap-filling in relation to appropriate qualifications and the function of accredited bodies in that regard.

01/02/2011

Training needs

TC 2.1.11

Firms should ensure that their employees' training needs are assessed at the outset and at regular intervals (including if their role changes). Appropriate training and support should be provided to ensure that any relevant training needs are satisfied. Firms should also review at regular intervals the quality and effectiveness of such training.

01/11/2007

Maintaining competence

TC 2.1.12

A firm must review on a regular and frequent basis employees' competence and take appropriate action to ensure that they remain competent for their role.

01/11/2007

TC 2.1.13

A firm should ensure that maintaining competence for an employee takes into account such matters as:

(1) technical knowledge and its application;
(2) skills and expertise; and
(3) changes in the market and to products, legislation and regulation.

01/01/2011

TC 2.1.14

A firm may choose to establish, implement and maintain a training and competence scheme.

01/01/2011

Continuing professional development

TC 2.1.15

Subject to TC 2.1.17 R, a firm must ensure that a retail investment adviser who has been assessed as competent for the purposes of TC 2.1.1 R remains competent by completing a minimum of 35 hours of appropriate continuing professional development in each 12 month period.

31/12/2012

TC 2.1.16

In order to meet the requirement in TC 2.1.15 R, a retail investment adviser should complete no less than 21 hours of structured continuing professional development activities.

31/12/2012

TC 2.1.17

A firm is permitted to suspend the requirements of TC 2.1.15 R in respect of a retail investment adviser for the period of time during which the retail investment adviser is continuously absent from work, if that absence is due to:

(1) maternity, paternity or adoption leave;
(2) long-term illness or disability;
(3) caring responsibilities for a family member who has a long-term illness or disability; or
(4) any other absence allowed in order for the firm to meet its statutory duties in relation to equality and diversity.

31/12/2012

TC 2.1.18

In TC 2.1.17R (3), a family member includes a partner, parent, grandparent, sibling or child.

31/12/2012

TC 2.1.19

In deciding whether to suspend the requirements of TC 2.1.15 R, a firm should take into account:

(1) the retail investment adviser's individual circumstances;
(2) the length of time the retail investment adviser is likely to be absent from carrying on the activity; and
(3) its statutory duties in relation to equality and diversity.

31/12/2012

TC 2.1.20

Examples of structured continuing professional development activities include participating in courses, seminars, lectures, conferences, workshops, web-based seminars or e-learning which require a contribution of thirty minutes or more.

31/12/2012

TC 2.1.21

Examples of unstructured continuing professional development activities include:

(1) conducting research relevant to the individual's role;
(2) reading industry or other relevant material;
(3) participating in professional development coaching or mentoring sessions.

31/12/2012

TC 2.1.22

All continuing professional development should:

(1) be relevant to the retail investment adviser's current role and any anticipated changes to that role;

(2) maintain the retail investment adviser's knowledge by reference to current qualification standards relevant to the retail investment adviser's role;

(3) contribute to the retail investment adviser's professional skill and knowledge;

(4) address any identified gaps in the retail investment adviser's technical knowledge;

(5) have written learning objectives based on learning needs and a documented learning outcome;

(6) be measurable and capable of being independently verified by an accredited body.

31/12/2012

TC 2.1.23

Continuing professional development completed by a retail investment adviser in relation to activities other than acting as a retail investment adviser should not be taken into account for the purposes of TC 2.1.15 R unless it is also relevant to the activity of acting as a retail investment adviser.

31/12/2012

TC 2.1.24

A firm must, for the purposes of TC 3.1.1 R (Record keeping), make and retain records of:

(1) the continuing professional development completed by each retail investment adviser; and
(2) the dates of and reasons for any suspension of the continuing professional development requirements under TC 2.1.17 R.

31/12/2012

TC 2.1.25

A firm must not prevent a retail investment adviser from obtaining a copy of the records relating to that retail investment adviser which are maintained by the firm for the purposes of TC 2.1.24 R.

31/12/2012

Annual declarations

TC 2.1.26

A firm must ensure that a retail investment adviser confirms annually in writing that the retail investment adviser has, in the preceding 12 months:

(1) complied with APER; and
(2) if applicable, completed the continuing professional development required under TC 2.1.15 R.

31/12/2012

Independent verification

TC 2.1.27

A firm must obtain from an accredited body independent verification of the firm's compliance with:

(1) in respect of its retail investment advisers only, the requirement in TC 2.1.1 R to attain each module of an appropriate qualification;
(2) TC 2.1.15 R; and
(3) TC 2.1.26 R.

31/12/2012

TC 2.1.28

The independent verification in TC 2.1.27 R must be obtained by a firm:

(1) in respect of a competent retail investment adviser who began to carry on the activity of a retail investment adviser on or before 31 December 2012, within 60 days of that date and of the anniversary of that date thereafter;
(2) in respect of a retail investment adviser who began to carry on the activity of a retail investment adviser on or after 1 January 2013, within 60 days of the date on which the retail investment adviser was assessed as competent as a retail investment adviser and of the anniversary of that date thereafter.

31/12/2012

TC 2.1.29

Independent verification for the purposes of TC 2.1.27 R should take the form of a statement of professional standing issued by an accredited body.

31/12/2012

TC 2.1.30

The Glossary definition of accredited body contains a list of bodies recognised by the FSA for the purpose of providing the independent verification required under TC 2.1.27 R. Information on accredited bodies, including guidance on the process for including a body in the list is set out in TC Appendix 6G and the obligation to pay the application fee is set out in FEES 3.2.

31/12/2012

Notification requirements

TC 2.1.31

A firm must notify the FSA as soon as reasonably practicable after it becomes aware, or has information which reasonably suggests, that any of the following events has occurred or may have occurred in relation to any of its retail investment advisers, and the event is significant:

(1) a retail investment adviser, who has been assessed as competent for the purposes of TC 2.1.1 R, is no longer considered competent for those purposes;
(2) a retail investment adviser has failed to attain an appropriate qualification within the time limit prescribed by TC 2.2A.1R (1);
(3) a retail investment adviser has failed to comply with a Statement of Principle in carrying out his controlled function; and
(4) a retail investment adviser has performed an activity in TC Appendix 1 before having demonstrated the necessary competence for the purposes of TC 2.1.1 R and without appropriate supervision.

01/07/2011

TC 2.1.32

When considering whether an event is significant a firm should include the following in its considerations:

(1) the potential risk of consumer detriment as a result of the event;
(2) whether the event or a pattern of events indicate recurrent issues in relation to one or more retail investment advisers; and
(3) its obligations under Principle 11.

01/07/2011

TC 2.1.33

The Retail Investment Adviser Competence Notification Form approved by the FSA for notifications under TC 2.1.31 R may be found at the FSA's website www.fsa.gov.uk/Pages/Doing/Regulated/Notify/index.shtml.

01/07/2011

TC 2.2A

Time limits

01/01/2011

Calculation of time limits for attaining an appropriate qualification

TC 2.2A.1

(1) For the purposes of TC 2.1.1 R, if an employee carries on an activity in TC Appendix 1 (other than an overseeing activity), a firm must ensure that the employee attains an appropriate qualification within 30 months of starting to carry on that activity.
(2) For the purposes of (1), a firm must record the date on which the employee starts to carry on that activity.

01/01/2011

TC 2.2A.2

For the purposes of calculating the 30 months referred to in TC 2.2A.1 R, a firm must:

(1) aggregate periods of time spent carrying on the activity during different periods of employment; and
(2) disregard any period of 60 business days or more during which the employee is not carrying on the activity due to being continuously absent from work.

01/01/2011

TC 2.2A.3

A firm must ensure that any employee who does not attain an appropriate qualification within the specified time:

(1) ceases to engage in the activity to which that qualification would relate; and
(2) does not resume that activity without first attaining an appropriate qualification.

01/01/2011

TC 2.2A.4

Firms may wish their employees to attain an appropriate qualification within an earlier time limit or to place limits on the number of times that qualification can be taken.

01/01/2011

TC 2.2A.5

Firms may wish employees who carry on an overseeing activity specified in TC Appendix 1 to attain an appropriate qualification within 30 months of starting the activity.

01/01/2011

Record-keeping

TC 2.2A.6

A firm should, for the purposes of TC 3.1.1 R (Record keeping), make and retain records of the time limits within which the appropriate qualification has been attained.

01/01/2011

TC 2.2B

Reporting requirements

31/12/2012

Application

TC 2.2B.1

This section applies to a firm with employees that are retail investment advisers.

31/12/2012

Purpose

TC 2.2B.2

(1) The purpose of this section is to set out the requirement for firms which employ retail investment advisers to notify each individual retail investment adviser's professional standards data to the FSA.
(2) The purpose of collecting this data is to assist the FSA in the ongoing supervision of firms which employ retail investment advisers and to enable the FSA to gain an understanding of the professional development of individual retail investment advisers in the interests of protecting customers.

31/12/2012

Reporting requirement

TC 2.2B.3

(1) A firm must submit a report (the 'data report') to the FSA containing the information required by TC 2.2B.4 R quarterly, within 20 business days of the end of the quarter, unless (3) applies.
(2) The reporting periods are the four calendar quarters of each year beginning on 1 January.
(3) A firm need not submit a data report if no changes have occurred in relation to the information submitted by the firm in its previous report.
(4) A firm may submit a data report more frequently than quarterly if it wishes.

31/12/2012

Content of the report

TC 2.2B.4

The report must contain professional standards data as follows:

(1) the firm's name and FSA Firm Reference Number;
(2) the names and FSA Individual Reference Numbers of the firm's employees who are retail investment advisers, including trainees;
(3) whether a retail investment adviser has attained an appropriate qualification;
(4) if a retail investment adviser has not attained an appropriate qualification, the date on which the employee began to carry on the activity of a retail investment adviser; and
(5) the name of the accredited body used for the purposes of TC 2.1.27 R.

31/12/2012

TC 2.2B.5

The data report must comply with the provisions of TC Appendix 8R.

31/12/2012

TC 2.2B.6

A firm must submit the data report to the FSA electronically in a standard format prescribed by the FSA .

31/12/2012

TC 2.2B.7

A data report will not have been submitted to the FSA in accordance with TC 2.2B.6 R unless all mandatory data reporting fields (as set out in TC Appendix 8R) have been completed correctly and the report has been accepted by the relevant FSA reporting system.

31/12/2012