Demonstrating knowledge and competence of your staff – a burden or benefit for your organisation?


With the 10 year anniversary of the global financial crisis in sight, there is a swathe of new regulations around the world demanding employers to increasingly demonstrate the knowledge and competency of their staff. Whilst many of us working in financial services have long been subject to exams, there does seem to be a subtle but notable shift in focus; moving away from just knowledge acquisition at the outset of a career towards the demonstration of skills and competencies that are required to properly perform in a role and a career-long commitment to learning.

Knowledge, skills and competencies
Let’s begin by looking at the difference between these three interchangeable terms that are frequently used when considering a learning environment – knowledge, skills and competencies.

Knowledge can be defined as the theoretical understanding of a topic or subject, with little or no application to a scenario or environment. The reach of skills as a term does go further, and can be defined as a proficiency, facility or dexterity that is acquired or developed through training or experience – so more focused on the ‘how to’ rather than just the ‘what’.  But most far-reaching, is the term competency; defined as a cluster of related abilities, commitments, knowledge and skills that enable someone to act effectively in a job or situation.

This approach often led to individuals viewing the material they learnt as removed and disconnected to their day-to-day role and responsibilities

So what is changing nearly 10 years on and how can we reap the maximum benefits?
Historically we have experienced regulators setting standards focused on defining the required knowledge for a role and testing that knowledge within an isolated test or exam situation – remember those 30 technical fact-based multiple choice questions in a one-hour exam? This approach often led to individuals viewing the material they learnt as removed and disconnected to their day-to-day role and responsibilities – driving them to cramming the facts the night before an exam in the hope of producing that all important pass certificate to their compliance officer the next day.

We are now seeing regimes across Europe like MiFID2 (EU legislation regulating firms providing services to clients linked to financial instruments) which, whilst still requiring an appropriate qualification (flexibility will be left to individual member states), is very much focused on specifying the level of experience needed to be assessed as competent within a role, as well as requiring continuing education to be undertaken through one’s career; although the one year delay until 2018 has provided some respite these changes will clearly be far-reaching. Similarly, the Swiss private banking market will introduce a new wide-reaching certification regime in 2017 with three pillars: a technical body of knowledge to be tested via a written exam, an oral assessment on the advisory process to clients, as well as ongoing continuing professional development and regular recertification of competence.

A significant shift
This significant shift in emphasis from just knowledge to competencies, although perhaps adding to the complexity of implementation, could help deliver benefit to your organisations. The more effective coupling of a body of knowledge by the regulator to an employee’s role, and the need for employees to continue learning throughout their career has a number of significant benefits:

  • The learner feels the knowledge they acquire is more useful to their role; improving the WIIFM (What’s In It For Me) value
  • The organisation can demonstrate a better return on their investment in training – it is more role specific and training KPIs (Key Performance Indicators) can be more closely aligned to those of the underlying business

And whilst numerous financial institutions may cite existing and long-standing internal programs built on competency based frameworks, it is the requirement across the entire industry to deliver that could even contribute towards the restoration of trust and belief in our industry by the most important people – its customers; something that came close to being destroyed in the global financial crisis almost 10 years ago.

So rather than purely viewing these new regimes as burdensome, a driver of higher costs and another pressure on already precious time and resources, the industry should embrace the opportunity to change the impact on training across financial services.


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