T&C Scheme Framework – How to build your scheme 2024 version

We are often asked how to build or structure a T&C scheme or Competence framework. To build a robust scheme use these framework elements.  These are based on both the TC sourcebook and industry best practice.  Larger firms should try to satisfy all the indicators within each element.

Since the introduction of the Consumer Duty regulations there is increased focus on how firms are dealing with people performing non Appendix 1 activities.  This means the people that are connected to the customer journey that are not performing an activity subject to TC. The FCA makes it quite clear that these people must be competent and in their guidance suggest that using TC could be an approach you could use.

This framework provides the base from which you can build a scheme or review what you already do. Depending on the size, nature and complexity of your business you may wish to take a proportionate approach

T&C SCHEME COMPETENCE PRINCIPLE

By understanding their role and personal performance against known standards employees know how they personally contribute to the company achieving their corporate outcomes.

1. Each job holder has a clear understanding of their job role.
2. Each job holder understands and accepts what measures they need to achieve to be deemed competent in their role.
3. Any difference between standards associated with competence and the highest levels of achievable performance in the role are clear.
4. Standards used must be measurable.
5. The standards associated with competence result in meaningful business outcomes being achieved.  This helps ensure that competence standards are set at the appropriate level.
6. Competence standards ensure that personal performance delivers acceptable outcomes against any values, competency or behavioural framework.
7. The connection between culture, value and code of conduct is understood and can be evidenced as part of ethical behaviour.
8. All relevant staff understand the code of conduct. How it affects their role and how they can demonstrate adherence to the code.
9. Each job holder understands how competence in their role helps the company achieve defined corporate outcomes. (This will normally includes good consumer outcomes).
10. Competence requires people to understand how your firm’s vulnerable customers policy applies to them and how to adjust their approach accordingly.
11. Competence requires people to understand the impact of consumer biases in their role and be able to adjust their approach accordingly.
12. Competence considers the whole job and not just specific elements within it.
13. Competence is maintained through individually tailored programmes of CPD using a mixture of structured and unstructured activities.
14. CPD is also used to develop people beyond competence levels in their current role or to facilitate future career opportunities.
15. All individuals must have a development plan – as a minimum showing how CPD is used to maintain competence.
16. All development plans indicate the improvement in quantity, quality or consumer outcome that will result assuming the development is successful
17. The standards associated with competence are reviewed periodically to ensure that they continue to deliver expected business outcomes.

T&C SCHEME RECRUITMENT PRINCIPLE

Employees are selected for roles based on an objective assessment of their potential and suitability to fulfill the standards required for the role.

1. Persons performing tasks within the selection process must be competent to do so.
2. Policy is clear whether you recruit inexperienced new entrants or experienced new entrants or mixture and shape the selection process accordingly.
3. Selection processes must use elements that consider the applicant’s current knowledge, skills and behaviour compared to those required for the prospective job
4. All relevant qualifications must be supported by original examination certificates.
5. Steps are taken during the recruitment process to ensure candidates are a good cultural fit for the firm.

TRAINING PRINCIPLE

Training follows a continuous cycle to ensure needs are identified, addressed and result in improvements in business quantity and/or quality

1. A gap analysis is performed for each new entrant to determine the inputs required on the pathway to competence.
2. Training is carried out by those people competent to do so.
3. Induction training includes culture, values, code of conduct, vulnerable customers, consumer biases and how good consumer outcomes are attained.
4. Structured training is in place to cover all firm specific policies and procedures relevant to the role.
5. Training interventions are preceded by a pre-brief and followed by a post brief.
6. Follow up ensures that learning is transferred to the job.
7. The initial development plan will document how the gaps in the pathway to competence will be addressed.
8. Training is periodically reviewed and evaluated to ensure that it was and remains fit for purpose.
9. There is a training planning process that covers strategic, operational and individual training to ensure that there are no conflicts and the plans are manageable

T&C SCHEME ASSESSING COMPETENCE PRINCIPLE

Competence is assessed reliably across the business against relevant standards designed to achieve specific business outcomes

1. Whoever performs the role of assessor must be competent to do so
2. Sufficient evidence must be gathered to evidence competence
3. To be competent the person must routinely demonstrate the ability to perform the task to the required standards.
4. Sufficient evidence requires the assessor to consider the range of activities, different customer types or permutations that might be engaged.
5. The standards used to assess competence must be clear, understood and accepted by the parties involved.
6. Competence is assessed reliably across the business.
7. Evidence used to assess competence must be the most recent examples of the persons’ performance.
8. Evidence used to assess competence must be valid for the element of competence to be assessed.  E.g. you would normally not use a case study to evidence a soft skill.
9. Evidence used to assess competence must be objective, not subjective.
10. Evidence used to assess competence must be capable of being confirmed for authenticity.
11. Once a person has attained competence they continue to take steps to keep their knowledge, skills and expertise up to date.
12. Individuals take responsibility for the ownership of their competence.
13. The evidence gathered to confirm competence must be considered as part of a FIT assessment when the individual is within scope of such regulations
14. Portfolios of evidence are used to demonstrate an individual’s competence.  The mix of evidence is tailored to the individual performing the job and all responsibilities within the job description.

T&C SCHEME SUPERVISION PRINCIPLE

Through effective supervision performance gaps and/or risks are identified and addressed.

1. The focus of supervision is on the effectiveness of the supervisory invention
2. Supervisors must be competent to perform their role
3. Supervision is appropriate to the possible risks identified in achieving the desired outcomes.
4. Supervision is based on a continuum ranging from 100% to minimum benchmark levels. The criteria used to apply this supervisory continuum are clear.
5. Key performance measures are defined and measured against key job outputs.
6. Any assessments are performed by people that do not have a vested interest in the outcome.  If they do appropriate measures are in place to sample the appropriate application of the assessment decisions
7. Performance is reviewed on a frequency appropriate to the experience and competence of the person.
8. As a minimum requirement performance must be reviewed annually
9. Supervision is focused on the management of competence/highest level of achievable performance not by the need to complete a minimum number of activities.
10. Measurement of performance can pinpoint  the level someone is performing and not just whether they are competent or not.
11. Development is able to progress an individual beyond competence towards the highest level of achievable performance
12. The outcome of performance reviews is commensurate with the standards of competence
13. Supervisors continue to refresh evidence of competence to ensure that it remains reflective of the individual’s current performance.
14. For regulated roles the employee must pass the regulatory module of the exam before starting regulated activities with customers.
15. Adequate supervisory resource is deployed at all times
16. Where supervisory responsibilities are split the demarcation of responsibilities is clear.
17. Supervisors must be competent to assess and coach individuals.

T&C SCHEME QUALIFICATIONS & TESTS PRINCIPLE

Employees can demonstrate knowledge required for roles they undertake through passing professional examinations and/or job specific assessments.

1. Development through the achievement of appropriate qualifications is encouraged.
2. A control framework is built around any qualifications stating time frames and number of attempts permitted.
3. Any tests designed to assess knowledge aspects of competence are sourced against a knowledge syllabus.
4. Test questions are written by people competent to do so.
5. A failure policy is appropriately applied ensuring that support is available in between test attempts.
6. Formal role plays  have defined briefs for participants and assessors with clear objectives as to what is being measured
7. For regulated roles the person must pass the appropriate examination before being deemed competent

T&C SCHEME REPORTING & CONTROLS PRINCIPLE

Senior Management can demonstrate how they ensure consistent application of these principles are applied within their business area

1. The scheme has a clear set of measurable objectives with regular reporting against them.
2. Senior Management can demonstrate how effectively the scheme is working at national level against expected objectives/outcomes
3. The information shared to help populate the annual board report on consumer duty must be timely, accurate and acted upon.
4. You can interrogate high level information to drill into root causes at lower levels
5. Sufficient data is gathered to produce MI that demonstrates whether good consumer outcomes have been achieved.
6. Key Performance Indicators used should consider quantitative, qualitative, leading, lagging as a minimum with MI being split by cohorts (new, existing, vulnerable, advice route).
7. There is a clear 2 way flow of relevant information from first line supervision to Senior Management Functions
8. It is clear who takes overall responsibility for the approaches taken and how governance works.
9. There must be a change control policy
10. There must be a version control policy
11. Remuneration approaches are geared to rewarding the desired outcomes of quantity and quality.
12. There is process in place to ensure consistent communication of the approaches to be taken.
13. You can demonstrate the robustness of Management Information.
14. A process in place to escalate risks and issues up to the governance committee as appropriate.
15. Existing corporate processes are utilised wherever possible to ensure consistency across the business and avoidance of ‘reinventing the wheel’
16. Exit interviews are conducted to ensure risks and issues are identified.
17. Supervisors changing roles/leaving ensure that all records and activities have been completed to the required standards.
18. There is an appropriate supervisor handover process
19. A process in place to gather and review feedback from users and customers. Such processes could include focus groups, complaints analyses and exit surveys
20. There is a process in place to share best practice

T&C SCHEME RECORD KEEPING PRINCIPLE

Record keeping is embraced as an essential and effective business practice satisfying regulatory requirements as a by-product

1. Sufficient records are kept to provide evidence of a person’s current level of competence
2. Records that are kept are capable of being understood and enable continuity of management where appropriate
3. There is a monitoring programme in place to ensure records are maintained at the required standards.
4. Compliance/2LOD staff know how to check what’s not there rather than just rely on the records with which they are presented.