T&C evaluation


We’re all familiar with TC 2.1.12 in which the FCA state that a firm must review on a regular and frequent basis employees’ competence and take appropriate action to ensure that they remain competent for their role. Helpfully they go on to provide examples of areas in which consideration needs to be given with technical knowledge and changes in products being particularly pertinent in the light of recent events.

We’ve had RDR for eighteen months followed by the MMR and consumer credit coming under FCA regulation and then the Budget with its bombshell on the future of annuities and pensions more generally.

In this context I find TC 2.1.14 fascinating: A firm may choose to establish, implement and maintain a training and competence scheme. How else would a firm ensure that it identified training needs from the point at which an individual joins them until they get the gold watch after a lifetime of productive work?

A lot of effort went into getting firms and their advisers ready for RDR, with many having to take additional exams. CPD requirements stipulate a number of hours that must be completed and the distinction between structured and unstructured has added depth to the approach that can be taken. My concern, shared by a number of people I have spoken to, is that the idea of planning in advance what someone’s needs are and then looking for relevant CPD is yet to gain traction.

PS 11-1 included the following statement: ‘ We continue to place emphasis on the importance of CPD as we see this as critical for delivering ongoing improvements in adviser competence, including knowledge levels’. The caveat is that there needs to be some reflection on what activities were undertaken and the outcomes achieved. While improvement is a good ambition neither the policy statement nor the T&C section of the handbook set out what this evaluation should look like.

Thus there is scope for firms (and even individuals within firms) to come up with their own approach to this but I would suggest that there will be certain key elements:

  1. Identify your market place – what sort of clients will you generally be working with and what are their needs. Consider the qualifications that are relevant and obtain them if you haven’t done so already.
  2. Identify gaps in your knowledge, skills or experience. These will be specific to you – any plan should meet your needs not offer a sheep dip approach. I think one of the saddest things I have heard on a training course was when I asked the group why they were there and one said out load he wasn’t interested in the content of the session but was short of CPD hours.
  3. Write down what you want to know or be able to do differently. This may be for your existing client profile or to expand into new areas but should be practical and realistic; not everyone can specialise in advising supermodels or Ukranian ex-pats.
  4. Identify appropriate solutions. Have you or your advisers looked at preferred learning styles in order to establish what type of CPD is most likely to be effective?
  5. Complete the CPD. Attend the course, do the online module, research specific client needs or whatever you have established meets your needs.

Things happen and the goal posts are certainly mobile but businesses that know what they want to achieve and how they can add value for their clients will be flexible enough to cope. Having a T&C scheme that responds in this environment may be a significant part of this resilience.

RDR was seen as threatening to reduce the number of advisers, MMR was initially perceived as doing the same in the mortgage market and the advent of FCA regulation of consumer credit has seen a number of firms withdraw – though experience indicates this may have been an oversight for some firms given the enquiries I’m receiving for firms who didn’t get their interim permission sorted out. In my nearly thirty years in financial services one thing remains constant: the resilience of small firms and their owners.

The challenge is to find the time to create a means of evaluating training interventions of all kinds so that the CPD log is truly reflective of effective professional development.

Firms are facing a great deal of change and not many can afford to throw money at keeping on top of it all. The key has to be to get the best value from the solutions which the firm implements. The challenge is to find the time to create a means of evaluating training interventions of all kinds so that the CPD log is truly reflective of effective professional development.

There are a number of methods of evaluating the impact of a training intervention ranging from happy sheets to success in passing a test or exam on the material covered. Kirkpatrick’s model indicates four levels:

reaction – was it a good experience?

learning – what do you know now that you didn’t before?

behaviour – what changes have there been in what you do?

results – what are the outcomes of applying the learning?

We work for commercial organisations so part of evaluation is in measuring the bang for your buck – focusing on the impact on the bottom line of the results in Kirkpatrick’s model and linking it to 1) above. Making more money and/or reducing costs are essential to business growth.

Francis Bacon said that knowledge is power – Kofi Annan added that education is the premise of progress. However it cannot be random; growth or progress require a vision: where does the business want to be? With a vision in place it is possible to focus on relevant business opportunities and identify what should be in stage two of Kirkpatrick’s model.

I was disappointed that the FCA stipulated a minimum number of hours of CPD – as a trainer I do not want people turning up just because they are short of their target coming up to the end of their CPD year. It’s a poor reflection on the profession that they thought it necessary. Perhaps this is why some firms have moved away from calling theirs a T&C scheme so that the title focuses on achieving personal or professional growth.  Whatever name you have chosen to give it (could there be a competition for the most creative name??), knowing what you want to achieve has to be the starting point – whether you got there is far more important than whether you have a specified number of hours CPD under your belt.

While Kirkpatrick provides useful measures I believe that the key T&C evaluation tool is your firm’s business plan. Does looking back at the changes brought about by RDR, MMR or consumer credit indicate that your evaluation of T&C could be improved? Were you and your staff ready for each as they came into effect? If any or all of them were a struggle to cope with then taking a step back and considering the business plan might be useful. Thinking about where the business is now and where you want it to be will possibly identify behaviours, skills and knowledge that are currently lacking. An effective approach to learning and development is one which delivers the business plan.

A topical example

Given the recent changes in pension rules there will be innovative products being brought out. Your firms recognise that the at-retirement market is likely to be increasingly important as existing clients age and awareness of the options increases.

While many of the products are likely to be variations on existing ones such as the one year annuities which have come out to bridge the gap until the new rules are in place it is to be hoped that some will be completely revolutionary. As a result the advisers in your firm will need to get up to speed with what’s available and, given previous FCA concerns about suitability, for whom they are appropriate.

These gaps in knowledge will need to be filled and no doubt providers will be rushing to organise or sponsor events to get their good news to you. It’s at this point that firms should take a step back and consider what they want to be able to do as a result of any information or training that is provided to ensure a consistent message and process are in place. How many clients are likely to be affected and how will the advice process reflect the new solutions – how will those monitoring these also be brought up to speed.

Your knowledge of your advisers, their preferred learning styles, etc will help you to select the appropriate solution(s) and establish the learning objectives so that once the training has taken place there are measures that can be applied. Hopefully it will be enjoyable but the key measure is the ability to implement – so do have a marketing plan in place: who will be contacted, by whom and with what. Then your management information system can pick up the number of clients contacted and in an ideal world (where we all live??) identify the additional fee income generated. Was the training worth it to the client, to the adviser and to the firm?


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Compliance Cubed Financial services is constantly changing - my passion is helping firms function effectively and in compliance with FCA regulation

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