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 own needs effectively
and efficiently. This means that firms should take a risk-based approach to
T&C so they spend time and resource on the areas that need it rather then
applying a standard approach in every circumstance.
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SIFA 10.1.2
See Notes
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SIFA 10.1.3
See Notes
Chapter 2 contains sections on recruitment, training, attaining competence, appropriate exams, maintaining competence, supervising and monitoring and record keeping. The TC 2 rules apply to employees of a firm engaging in or overseeing the activities in the table in TC 2.1.4 G. Activities under the heading of 'advising without dealing' are likely to be the most relevant to smaller investment intermediaries, though you should check whether other activities may also be relevant.
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SIFA 10.1.4
See Notes
The sections in TC 2 on training, recruitment and supervising and monitoring apply only to activities carried out for private customers.
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SIFA 10.2
Commitments
- 09/09/2005
SIFA 10.2.1
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 TC 2 rules.
- 09/09/2005
SIFA 10.2.2
See Notes
The firm's commitments to training and
competence should be that:
'Employee' is a generic term that covers everyone who works in a firm.
(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.
- 09/09/2005
SIFA 10.3
Rules And Guidance
- 09/09/2005
SIFA 10.3.1
See Notes
Being competent means being able to show
the relevant individual has and maintains the necessary knowledge, skills
and experience to do the job and does it to the required standard effectively
and consistently. Once assessed as competent the individual can act without
being supervised.
- 09/09/2005
SIFA 10.3.2
See Notes
Competence is made up of:
Knowledge and skills must be assessed, measured and improved where necessary.
•application
of knowledge and skills; and•appropriate
examination passes.
Knowledge and skills must be assessed, measured and improved where necessary.
- 09/09/2005
SIFA 10.3.3
See Notes
The activity in the Training and Competence sourcebook most likely to be carried out by a small advisory firm is TC 2.1.4 G 1(f) - 'Employees engaging in advising on investments, which are packaged products (other than broker funds or long-term care insurance contracts)'.
- 09/09/2005
SIFA 10.3.4
See Notes
If employees advise on long-term care insurance (LTCI) contracts (under TC 2.1.4 G 1(ha)), they must be competent to advise on LTCI contracts (under TC 2.4.5 R). This activity became a regulated activity on 31 October 2004. LTCI contract advisers who were deemed competent at that date under a transitional provision in TC do not have to pass an appropriate LTCI examination at the moment. However, this transitional provision remains in force only until 30 October 2006. The effect of this is that LTCI contract advisers deemed competent under the transitional provision must have passed an appropriate LTCI examination before 31 October 2006. Firms whose employees advise on LTCI contracts should also consider whether TC 2.5.5A R applies.
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SIFA 10.3.5
See Notes
If employees provide basic advice on
stakeholder products, there is no examination requirement. However, the firm
must still assess them as competent before they can give this type of advice
without being supervised.
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SIFA 10.3.6
See Notes
We no longer include a list of approved
examinations in TC. Instead, the Financial Services Skills Council (FSSC)
maintains a list of 'appropriate examinations' from which firms can select
an appropriate exam(s). The list of appropriate exams is on the FSSC's website: www.fssc.org.uk/cgi-bin/go.pl/exams/index.html
- 09/09/2005
SIFA 10.3.7
See Notes
In applying the T&C rules you should consider the following:
- Who do the rules apply to? (TC 2.1)
- What is the existing level of knowledge and skills of the individual? (TC 2.2, TC 2.3)
- What knowledge and skills are required to carry out the role to an adequate standard? (TC 2.4)
- What action such as training is required to fill the gaps? (TC 2.3)
- How is it known whether the training has worked? (TC 2.3)
- How to measure the level of knowledge and skills already achieved and compare this with the level required? TC 2.4)
- What are the time limits for passing an appropriate examination? (TC 2.5)
- Once achieved, how is competence to be maintained? (TC 2.6)
- What arrangements need to be in place to ensure that non-competent employees are appropriately supervised? (TC 2.7)
- What arrangements need to be in place to ensure that competent employees are appropriately monitored? (TC 2.7)
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SIFA 10.4
Training Plan
- 09/09/2005
SIFA 10.4.1
See Notes
Firms should have a training plan in place for each employee carrying out an activity listed in TC 2.1.4 G. This plan should cover the testing and measurement of skills and knowledge. The firm must, at intervals appropriate to the circumstances, determine the training needs of those employees and organise appropriate training to address these needs (TC 2.3).
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SIFA 10.5
Recruitment
- 09/09/2005
SIFA 10.5.1
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).
- 09/09/2005
SIFA 10.6
Maintaining Competence
- 09/09/2005
SIFA 10.6.1
See Notes
Your firm needs arrangements in place to ensure an employee remains competent. These might include tests, role-plays, and performance indicators or file checks. It is up to the firm to determine the most suitable methods (TC 2.6).
- 09/09/2005
SIFA 10.7
Supervision And Monitoring
- 09/09/2005
SIFA 10.7.1
See Notes
You must ensure that if an employee is not assessed as competent they are appropriately supervised until assessed as competent in that activity (TC 2.7.1 R). In the case of an employee advising private customers on packaged products, the individual supervising that employee must have passed an appropriate examination and have the required knowledge and skills before acting as supervisor (TC 2.7.5 R).
- 09/09/2005
SIFA 10.7.2
See Notes
You must have arrangements in place to ensure that employees who have been assessed as competent are appropriately monitored in that activity (TC 2.7.5A R). The level of monitoring will vary depending on the knowledge and skills of the employee. It is likely to be less intense than the supervision carried out on employees who are not competent.
- 09/09/2005
SIFA 10.7.3
See Notes
A sole trader or the only director or partner in a firm who is carrying out the activity, can monitor themselves. In both cases, the individual should be able to prove that they have complied with the requirements of TC 2.7.5A R. The sole trader or firm should try to make appropriate arrangements where practicable, as it can be difficult to be objective about one's own performance.
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SIFA 10.7.4
See Notes
If an employee falls below the standard expected of a competent employee, the firm must make arrangements for supervising the employee (TC 2.7.5C R). Where the employee is advising private customers on packaged products, these arrangements should ensure that the individual supervising the employee satisfies the requirements of TC 2.7.5 R as described in paragraph 10.7.1 above.
- 09/09/2005
SIFA 10.8
Record Keeping
- 09/09/2005
SIFA 10.8.1
See Notes
TC Sch 1 gives an overall view of the record-keeping requirements. A firm must make and retain 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.
| Information about recruitment, training and competence that must be retained: |
| • The criteria applied in assessing competence and how and when the competence decision was arrived at. |
| • The time limits within which an appropriate examination has been passed. |
| • The criteria used to decide that an employee is exempt from an appropriate examination. |
| • The criteria applied in assessing continuing competence and how the employee continues to be competent. |
| • The criteria used to decide the level of supervision and monitoring and how it carries out the supervision and monitoring of its employees. |
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SIFA 10.8.2
See Notes
Your firm must retain records for at
least three years after the individual ceases to carry out an activity. These
are minimum requirements and you may decide to keep material for longer.
- 09/09/2005
SIFA 10.8.3
See Notes
The records of pension transfer specialists
must be kept indefinitely.
- 09/09/2005
SIFA 10.9
T&C Toolkits
- 09/09/2005
SIFA 10.9.1
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.
- 09/09/2005
SIFA 10.10
Further Help
- 09/09/2005
SIFA 10.10.1
See Notes
Our Industry Training department run
training and competence (T&C) workshops; you can find details on the Industry
Training Web Pages on the website (www.fsa.gov.uk/pages/doing/events/workshops/) or phone the Industry Training booking line on 020 7066 0752.
- 09/09/2005
SIFA 10.10.2
See Notes
We launched a revised T&C CD for
Investment Firms in the autumn of 2004 (CDs for mortgage and general insurance
firms are also available.) These T&C CDs contain:
•audio material
on the T&C sourcebook, including recorded sessions by FSA senior management;
and•CD-ROM material
on the T&C sourcebook relevant to the type of firm in question.
- 09/09/2005
SIFA 10.10.3
See Notes
You can order CDs by completing the order
form either:
•on our website
on the Industry Training web pages (under Distance Learning) at www.fsa.gov.uk/pages/Doing/Events/pdf/DL_TC_IF.pdf; or•on the flyers
sent to firms - then fax it to us or send it by post.
- 09/09/2005