Certification – sure you’ve done enough?

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Show us your policy and we will be on our way
By now everyone should be aware that the days of show us the relevant policy, we’ll tick the box and be on our way are far behind us – the debacle with Northern Rock put pay to that.

The FCA has teeth and some of us know how hard they bite. The Senior Managers Certification Regime, SMCR, just makes it easier for them to chew their prey.

Those of you reading this will be in one of three positions:

  • All your Certified staff are certificated- you are sitting pretty
  • This is not relevant to us yet as our firm isn’t affected until 2018 – plenty of time to address this
  • Our Certified staff still aren’t certificated yet– Oh xxxx – we are running out of time.

Lifting the carpets
Irrespective of what position your firm is in it may be useful to consider asking yourself the following question:

If the FCA were to lift the carpet in your firms premises, in other words ask you to take them through your assessment process for Certificated staff, would the process be robust?

What does she mean by robust I hear you say? (I don’t really hear that – I’m just using it for affect).

Competence Assessment Standards
T & C in the FCA handbook states “Firms need procedures in place with clear criteria for individuals to be assessed as competent, so all parties involved understand when competence has been reached”.

Has each of the job roles within your firm’s certification regime got an aligned set of competence standards?

A number of the appraisal standards we have come across are not competence standards they are performance standards. For an appraisal to stack up as robust, performance standards need to be there – the regulator, although they don’t express it, does realise you are a business – how else would you pay their annual fees! However those performance standards need to be accompanied by competence standards to ensure performance is not underpinned by a ‘shed load’ of risk.

How do you ensure there is consistency?

Are you a ‘Finger in the air’ method kind of a firm?
If it is down to the line manager to assess their member of staff as competent they need a method to measure. Experience may give someone the ability to gauge whether an individual is competent to do their job or not but experience is also subjective.  The finger in the air method of assessment is a tried and sorely tested method. Believe it or not people in Financial Services are prone to bias. If there isn’t a set of standards to assess someone’s competence and performance against, emotions step in:

“I can’t say Mandy is anything less than an A rated player as she is our top performer and I don’t want to upset her – she may leave us”

“John really challenges me on the decisions I make – I’m not going to rate him as highly as Tony. Tony isn’t as good at his job as John but he never gives me any bother”.

So what do I mean by competence standards?
I may be teaching my granny to suck eggs but just for clarity (A stupid expression to use as I expect the majority of you reading this are younger than me):

The FCA defines competence as “having the skills, knowledge and expertise needed to discharge the responsibilities of an employee’s role”.

Having a set of competence standards will not necessarily ensure consistency.  A set of competence standards are only as good if people understand how to use them. You also need to remember to give the poor individual that is being assessed a fighting chance by sharing the competence assessments with them –  prior to them being assessed of course…and the most important thing – you have records (evidence) of how you assessed the individual against the standards that can be replicated on paper.

We advise firms to break down their assessment standards into 4 ratings:

  • Competent
  • Competent with development
  • Non-Competent
  • Competent plus – you should always want people to strive for the best.

Underneath those headings we then recommend identifying the key elements. The easiest way to demonstrate this is give you an example. Please bear in mind this is a high level example and yours would be more specific and bespoke relevant to your firm and the processes you adopt:

Competence Competent Plus Competent Competent with development Non-competent
·          Initial contact with clients ·          All competence assessment criteria for competent plus Outlines all  of the information required from the customer and the reasons why ·          Full name of firm given and genuine reason for call/meeting explained

 

·            Business card given (only if new customer)

·          Explain regulated by the FCA to give advice

·          Explain that the firm only offers its own products

·          Explain that the firm will only advise and recommend the most appropriate product for the customer following a full assessment of needs and circumstance

·          Outlines at least 50%of the  information required from the customer

·          Full name of firm given and genuine reason for call/meeting explained

·          Business card given (only if new customer)

·          Explain regulated by the FCA to give advice

·          Explain that the firm only offers its own products

·          Explain that the firm will only advise and recommend the most appropriate product for the customer following a full assessment of needs and circumstance

·          Omits to outline the information required from the customer

·          Omits 1 or more of the following:

·          Full name of firm given and genuine reason for call meeting explained

·          Business card given (only if new customer)

·          Explain regulated by the FCA to give advice on products

·          Explain that the firm only offers its own products

·          Explain that the firm will only advise and recommend the most appropriate product for the customer following a full assessment of needs and circumstance 

 

As you can see it’s not rocket science, but the above is just one of many  competence assessment areas for that particular role. Consider your own situation:

How many different roles have you got in your certification regime?

If the SMCR is not relevant to you now – think about how many job roles you have in your organisation that could cause significant harm to the firm or its customers as those are the individuals that will need to be assessed as competent under the Certification regime.

Make sure, when the regulator lifts your carpets, you have swept beforehand – the FCA do like a nice clean floor.

If you haven’t got competence assessment standards in place have you got the time and the resource to create them – March the 7th 2017 is on the doorstep?

If you don’t come under the SMCR until 2018 use your time wisely – start reviewing job description and creating a robust assessment process for relevant individuals now.

As a firm that helps our clients satisfy the regulators requirements we are only too aware that you are not given uncapped budget to address the gaps in regulation you may have. So to help influence stakeholders to commit funds any additional benefits you can provide are always useful;

Competence Assessment standards as part of a robust Competence assessment process will:

  • Ensure consistency – people will be assessed in an objective, fair way across the firm
  • Lower risk – competence assessment coupled with performance ensures individuals carry out their role in the right way lowering the inherent risk.

Make sure, when the regulator lifts your carpets, you have swept beforehand – the FCA do like a nice clean floor.

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Philippa Grocott

Business Development Partner Financial Services Training Partnership

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