Nostradamus: requirement or desire to change?


They carry different levels of urgency.

I was asked to look at 2023 through a ‘change lens’ and try and predict what might be different at this point in time in 2024. I’m not sure Jeff meant how many more governmental screw-ups or prime ministers we would have had, rather – more specifically – what’s our take on employee Training & Competency (T&C)?

I will do my absolute best not to fall into the trap that many sector suppliers fall into when asked similar questions. I.e., predicting the sky will fall in if ‘such’ and ‘such’ a product isn’t immediately purchased! So, predicting anything that is prefixed with: “all”, “most” and “the majority” is over-egging the pudding, unless of course it is in relation to the sector not actually changing anything!

In fact, that is my first prediction. Whilst the regulator might be expecting to see wholesale change in the way firms deal with employee competency and evidencing of the same, I am completely certain that – all things being equal – they will not see it. On the whole, regulatory-driven change is slow, and most firms will continue as they do now; ticking a box and – frankly – waiting to be specifically told by the regulator that this strategy isn’t good enough.

How many firms today have an academy and have seriously invested in the in-house development of the talent they need to sustain and grow the business?

Take, for example, the “hype” that surrounded SM&CR. This regulation was trumpeted as game changing. The protection of corporate anonymity was being stripped away, organisations were required to map and file which senior individual was responsible for what activity so that individual senior managers could be identified and held to account for failings of their firms. Whilst I believe that the vast majority of firms set out to abide by the letter and spirit of the legislation, it would be a unique sector if this were true of all firms!

But, since SM&CR came into force in 2016, I believe there has only been one successful enforcement action by the FCA!1 One could perhaps be forgiven for thinking that once firms filed their responsibility maps, the regulator ticked a box, and it was BAU!

It might be why we repeatedly hear – from webinars we run attended by (over the past year) more than 1,000 compliance professionals from the sector – that few firms are concerned with falling short of the spirit of Consumer Duty. Almost every firm is (rightly) fixated on ensuring their filings are completed before the filing deadlines.2 This is because it is super-easy for the regulator to police if a submission was received or not before the published deadline (the quality of that submission is – I suspect – a different matter).

In fact, recently we hear comments that Consumer Duty is “TCF 2.0” and, as such, “firms have it covered”.  We are already seeing some IFA’s in particular publicly stating (and I paraphrase) that Consumer Duty doesn’t affect them, as they are already doing it and have been doing it for years.  Fingers crossed the regulator sees it the same way.

So, as it stands – and all things being equal – I am not expecting a wholesale shift in the way firms train and support employees driven by regulation. This isn’t to say that during 2023 more firms won’t examine the suitability of their T&C regime, but also balance the desire for change with the need for operational productivity and efficiency at a time of global recession.

Indeed, some firms will conclude that there is economic value to be had in switching to a more authentic approach to employee T&C and one that underpins a culture of compliance, rather than compliance completion. In 2022, we were already seeing one firm per week shift away from the traditional one-size-fits-all, annual refresher training model towards an AI-powered, continual assessment, personalised, in the flow of work, support methodology. But let’s face it, 50 out of 60,000 is hardly a tsunami of change!

So, will regulation – like Consumer Duty – drive wholesale changes to employee T&C in 2023?  No, I don’t think so, because principle-based regulation historically isn’t a catalyst for fast change (and of course in the case of the IFA community, some apparently already have it covered!). Slow pace of change driven by regulation, only being true of course where the regulator is unable to police and enforce at scale!  And to date, the FCA has shown it is completely incapable of doing so.

What I do predict is that the regulator is likely to improve its ability to police and enforce at scale using increasingly sophisticated technology – like Artificial Intelligence. The extent of that success is up for debate, and I am going to low-ball it, but I am predicting it will occur.

If the regulator succeeds beyond my expectations in 2023 using AI-powered screen scraping technology of consumer sentiment towards individual suppliers and their treatment of customers, then this could well be a catalyst for the faster change desired by the regulator. In a world where the regulator is coming to you with evidence of regulatory failing, rather than asking firms to mark their own homework, which is effectively the situation today, then desire for change is trumped by the requirement for change and pace is intensified.

So, in a nutshell, 2023 will only see more rapid regulatory-driven change to approaching employee T&C if the regulator improves its ability to police and enforce that regulation. It will do so in 2023, but by how much, I don’t know. Perhaps a few high-profile, “public hangings” might add additional momentum.

But regulatory-driven change is arguably a negative force for change, hence the general apathy and slow pace in the market. My “big” prediction – (caveat: paragraph two) – is the role of L&D in talent development. The ready-made talent the sector needs is – for whatever group of reasons – not available at the scale the sector (and others for that matter) needs. The UK government’s suggestion, that people who generally presented as not typically academic whilst in full-time education will self-educate themselves at home, is complete nonsense (caveat: paragraph one).


The “void” will be filled by employers, and I am already seeing more far-sighted firms invest in the establishment of in-house academies. In this situation, the endgame isn’t a tick in a regulatory box for the lowest cost of delivery; the endgame is the essential upskilling of an individual to a standard that means they can “do the doing” in whatever role they are going to be employed in. This means a step back in time to when employers provided genuine, authentic skills development, improvement training and apprenticeships in the workplace.

It would be an interesting datapoint to collect. How many firms today have an academy and have seriously invested in the in-house development of the talent they need to sustain and grow the business? And how many will there be 01/01/2024? I hear L&D functions and compliance and risk bemoan the lack of funding to do the things they desire to do. Not entirely surprising under the circumstances many would argue. But starve a business of the very oxygen it needs to grow and, suddenly, the cash constraints are off, solutions get funded and urgency increases.

It just so happens that this aligns really rather nicely with the regulator’s vision of firms having a culture of compliance. In truth, this is only really going to happen at pace when the employer invests in making it so. Ticking a regulatory box during a global recession isn’t much of a motivator, but essential employee development that otherwise hinders and restricts trading and growth, is.

So, my prediction is: regardless of how good the regulator gets at using AI to police and enforce at scale in 2023, regulation on its own is unlikely to be good enough to move the dial much more than it is moving now. Firms, however, will – of their own free will – invest to move the dial far faster, not because of Consumer Duty, SM&CR or improvement in the regulator’s policing ability, but perhaps for the very reasons the City has existed for centuries; making money.




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Adrian Harvey is CEO at Elephants Don't Forget. Elephants Don’t Forget are world leaders in the use of Artificial Intelligence to augment how each employee learns, retains and evidences in-role knowledge and competency. We support employee competency and compliance training of some the world’s most recognised brands including Microsoft, Vodafone, Experian, Allianz, Old Mutual, Aviva, Eon and Volvo.

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