SIFA 10
Training and Competence
SIFA 10.1
Training and Competence
- 01/12/2004
SIFA 10.1.1
See Notes
Training and competence is covered in
the Training and Competence sourcebook (TC). The sourcebook defines the standards
firms should achieve but does not prescribe in detail what a firm's training
and competence (T&C) arrangements should be. It expects a firm to use
this flexibility to design a T&C scheme that meets its needs effectively
and efficiently. This means that firms should take a risk-based approach to
T&C so that they spend time and resource on the areas that need it rather
than applying a standard approach in every circumstance.
- 01/12/2004
SIFA 10.1.2
See Notes
The TC sourcebook contains:
- (1) Transitional Provisions (TP);
- (2) Commitments (TC Chapter 1);
- (3) Rules and Guidance (TC Chapter 2); and
- (4) Interim approved examinations (Annexes).
- 01/12/2004
SIFA 10.1.3
See Notes
Chapter 2 contains sections on recruitment,
training, attaining competence, approved exams, maintaining competence, supervising
and record keeping. The TC2 rules apply to employees of a firm engaging in
or overseeing the activities in TC 2.1.4 R.
The activity of 'advising without dealing' is likely to be the one most relevant
to IFA firms, though you should check whether other activities may also be
relevant.
- 01/12/2004
Commitments
SIFA 10.1.4
See Notes
The Commitments amplify Principle 3 in
relation to training and competence. They apply to everyone within a firm
associated with a regulated activity including senior management who may not
fall within the scope of the TC2 rules.
- 01/12/2004
SIFA 10.1.5
See Notes
The firm's commitments to training and
competence should be that:
(1) its employees are competent;
(2) its employees remain competent for the
work they do;
(3) its employees are appropriately supervised;
(4) its employees' competence is regularly
reviewed; and
(5) the level of competence is appropriate
to the nature of the business.
Employee is
a generic term that covers everyone who works in a firm.- 01/12/2004
Rules and guidance
SIFA 10.1.6
See Notes
Being competent means being able to
show the relevant individual has the necessary knowledge, skills and experience
to do the job and doing it to the required standard effectively and consistently.
- 01/12/2004
SIFA 10.1.7
See Notes
Competence is made up of:
(1) application of knowledge and skills;
and
(2) appropriate approved examination passes.
Knowledge and
skills must be assessed, measured and improved where necessary.- 01/12/2004
SIFA 10.1.8
See Notes
The activity in the Training and Competence
sourcebook most likely to be carried out by an IFA is TC 2.1.4 R1(f) which covers employees engaging in advising on investments,
which are packaged products (other than broker funds). The approved exams
for this activity are in Annex 3R, Table 1, which can be accessed through
the following link:www.fsa.gov.uk/vhb/html/TC/TC2Annex3.html. It is up to regulated firms to decide which is the most appropriate
approved examination.
- 01/12/2004
SIFA 10.1.9
See Notes
We are consulting on moving from approved
examinations to appropriate examinations, which will be maintained by the
Skills Council for Financial Services. If the proposals are accepted, we intend
to implement them in 2004. The proposals are in CP194, available at 'http://www.fsa.gov.uk/pubs/cp/cp194.pdf.'
- 01/12/2004
SIFA 10.1.10
See Notes
In applying the T&C Rules you should consider:
(1) Who do the rules apply to? (TC 2.1)
(3) What knowledge and skills are required to carry out the role to an adequate standard? (TC 2.4)
(4) What action such as training is required to fill the gaps? (TC 2.3)
(5) How is it known whether the training has worked? (TC 2.3)
(6) How to measure the level of knowledge and skills already achieved and compare this with the level required? (TC 2.4)
(7) Once achieved, how is competence to be maintained? (TC 2.6)
(8) What arrangements need to be in place to ensure that employees are appropriately supervised? (TC 2.7)
- 01/12/2004
Training plan
SIFA 10.1.11
See Notes
Firms should have a training plan in
place for each employee carrying out an activity listed in TC 2.1.4 R. This plan should cover the testing and measurement of skills and
knowledge.
- 01/12/2004
Recruitment
SIFA 10.1.12
See Notes
When a new employee joins the firm you should think about the knowledge and skills of that individual and how they match up to the role they will perform. Your firm must also take reasonable steps to gather enough information about their previous activities, training and qualifications (TC 2.2).
- 01/12/2004
Maintaining competence
SIFA 10.1.13
See Notes
Your firm needs arrangements in place to ensure an employee remains competent. These might include tests, role-plays, performance indicators or file checks. It is up to the firm to determine the most suitable methods (TC 2.6).
- 01/12/2004
Supervision
SIFA 10.1.14
See Notes
Employees must be appropriately supervised both before and after they have attained competence. The level of supervision will vary depending on the competence of the employee and is likely to be less intense once competence has been attained (TC 2.7). In the case of an employee advising private customers on packaged products, the individual supervising that employee must have passed an appropriate approved examination and have the required knowledge and skills before acting as supervisor (TC 2.7.5 R). A sole practitioner is permitted to supervise himself.
- 01/12/2004
Record keeping
SIFA 10.1.15
See Notes
A firm must keep records to demonstrate
compliance with the rules (TC 2.8.1 R).
The records kept should enable the firm to demonstrate the information in
the table below:
- 01/12/2004
SIFA 10.1.16
See Notes
| Information about recruitment, training and competence that must be retained: | |
| • | How recruitment procedures have analysed the level of skills and knowledge of recruits |
| • | How training needs have been identified, evaluated and followed up |
| • | How and when decisions that competence has been attained are made |
| • | How decisions that competence has been maintained are made |
| • | How the supervision of employees is carried out, including criteria used to decide the level of supervision and that the supervisor is competent |
| • | Whether exams have been passed within the time scales allowed |
- 01/12/2004
SIFA 10.1.17
See Notes
TC Schedule 1 gives an overall view of
the record keeping requirements. Your firm must retain records for at least
three years after the end of an individual's employment. The records of pension
transfer specialists must be kept indefinitely.
- 01/12/2004
Transitional provisions
SIFA 10.1.18
See Notes
These may be found at TC Transitional
Provisions (TP). TP1 covers staff assessed as competent before N2 under the
rules of previous regulators. TP1 enables a firm to assess such an employee
as competent after N2 to carry on the same or substantially the same activities
without making an assessment of competence or requiring the employee to pass
an examination. When such a person is recruited, your firm should gather evidence
that TP1 applies. The new employer also needs to assess the person as competent.
This will be on the same basis as applied at N2, provided he carries on the
same, or substantially the same activity and provided there has not been a
significant break in employment since last assessed as competent. It is up
to the firm to decide what constitutes a significant break.
- 01/12/2004
SIFA 10.1.19
See Notes
TP4 allowed advisers at N2 the remainder
of the three-year time limit that they had to pass approved examinations under
the PIA Rules. The three-year time limit is not transferable. If the employee
moves to a new firm then he has until 30 November 2003 to pass the examinations
(TC Annex 3R Table 1).
- 01/12/2004
T&C Toolkits
SIFA 10.1.20
See Notes
Several industry bodies have worked to
develop best practice appropriate to their sector of the industry. The main
IFA trade associations have been involved in the Financial Services National
Training Organisation's Toolkit for IFAs.
- 01/12/2004
Further help
SIFA 10.1.21
See Notes
Our Industry Training department runs
T&C workshops. Since 5 September 2003 a T&C compact disc has also
been available (to order download and complete the flyer at http://www.fsa.gov.uk/industry-training/tc_distance_flyer.pdf,
or phone the industry training booking line on 020 7066 0752). Our T&C
Helpline (020 7066 0770/0766) also provides help for firms.
- 01/12/2004
Upcoming developments
SIFA 10.1.22
See Notes
CP 194, Amendments to the Training and
Competence sourcebook proposes:
(1) revising the requirement to pass an FSA
'approved' examination to one that is appropriate;
(2) removing the list of 'approved' exams
from our Handbook; and
(3) that firms will select the appropriate
examination from the examinations list to be maintained by the Skills Council
for Financial Services.
- 01/12/2004