Back in the 1990s, LAUTRO launched Training & Competence for those providing advice to retail customers, introducing the requirements around qualifications and competency. This has been followed by different regulator-led iterations (PIA, FSA) through to the current FCA rules and guidance, where all firms are required to ensure their employees are competent and follow the TC rulebook for certain individuals and activities.
Now the regulation around T&C hasn’t changed particularly, however, the prominence around competence and capability has, and it isn’t going away. The introduction of the Senior Management and Certification Regimes alongside the Conduct Rules ensures personal accountability and responsibility. Firms must make sure and evidence certification employees are competent and Fit and Proper, with everyone trained on the Conduct Rules and appropriate adherence.
The firms that are still operating a “tick-box” exercise to employee competence are going to struggle. Firms that cannot evidence how competent their employees are in dealing with vulnerable customers will struggle. Those firms that deliver lots of annual refresher training and think that will suffice, will struggle.
And, we now have the Consumer Duty which is due to be implemented in April 2023. This piece of regulation is going to be challenging for a lot of firms as it places an even greater focus on the competence of the individual. I am sure some of you have just read that last sentence and said to yourself “have I missed something?” To deliver and evidence a good customer outcome-driven approach across the whole firm you need competent people. These are the staff who are your “first line of defence” interacting with customers as well as those responsible for designing products, systems, and customer journeys. Take note of the types of data/information that the FCA says firms could use to monitor compliance with the Consumer Duty that relates to T&C.
The firms that are still operating a “tick-box” exercise to employee competence are going to struggle. Firms that cannot evidence how competent their employees are in dealing with vulnerable customers will struggle. Those firms that deliver lots of annual refresher training and think that will suffice, will struggle.
If you believe that you just need to amend the existing Conduct Rules training to incorporate the new rule and perhaps stick a new multiple-choice question on at the end, then I am afraid you may have missed the point.
Firms with an engaging customer-centric and development culture will have competent staff delivering a genuine fantastic customer experience. And, hopefully, they will have the management information to evidence this approach.
However, a lot of firms with competing budgets and perhaps a drive to lower costs through greater time efficiencies have not invested in Training & Competence solutions that engage individuals and create a development culture. How many of your staff see the recording of continuing professional development (CPD) as a necessary evil? Annual e-learning tests as something they must do, leave to the last minute, and then return to their day job? How many of you find the annual testing a repetitive almost pointless exercise?
For those firms that fall into this latter category, please consider how you can capitalise on the opportunity that the Consumer Duty provides. Review your approach to Training & Competence – culture, strategy, scope, activities, results, resources, evidence, and management information. Complete a gap analysis against the Consumer Duty requirements and be clear of what needs to change and why. Use the results of your analysis to gain support for the change in advance of the final rules – there are then only 9 months to implement.
Now I’d like to hear from you:
What are the outputs of your Consumer Duty gap analysis? What are your key recommendations? Do you think 9 months is sufficient time to implement the Consumer Duty?
