Whether you are a solo regulated firm having completed your first fit and proper assessments or a firm who is subject to the wider Training & Competence, MiFID, or Insurance Distribution Directive (IDD) competence and capability requirements, review and evaluation should be part of your routine practice.
When you think of your competence policies and processes, do you think of dusty manuals and guides that haven’t been amended since creation? What about your processes on how and when to do something?
Some think that once a policy or process is created, they are carved in stone and unchangeable. But that is the wrong way to think of your firm’s approach to competence.
An effective approach to competence means that your policies and processes are part of a ‘living’ framework that should grow and develop. While core elements are likely to remain the same, the details need to continually adapt to change and progress.
An effective approach to competence means that your policies and processes are part of a ‘living’ framework that should grow and develop
Why is it important to review your competence policies and processes?
- It ensures your competence frameworks are effective and consistent.
- An outdated approach can put your organisation at risk and policies may also be non-compliant with laws and regulations.
- Regular reviews keep your firm up to date with regulations, technology, and best practice.
When should you review your competence policies and processes?
Regularly and proactively
Reviews are most effective when done regularly and proactively, not in reaction to an issue. Generally, you should review a policy between one and three years, so, make sure you schedule time in the calendar. It is also good practice to have a documented review process to help identify and evaluate what works and what doesn’t. I recommend an approach which helps answer the following three questions:
- Are your competence policies having the desired effect? (Outcome evaluation)
Your policies should have clear goals or objectives. It is reviewing these objectives that will help you ascertain whether the policy is effective; has it had the desired impacts – improved customer outcomes, increased colleague competency, the delivery of a fantastic customer service?
What measures and indicators do you have in place to evaluate that colleagues are competent with the desired level of knowledge, skills, and expertise? If one of the measures includes timescales to attain competence and this is exceeded, is the policy doing what it’s supposed to do?
You need to examine where the policy is failing, ask for feedback from supervisors and front-line colleagues about what needs to be done differently. Ensure that the supporting guidance tools are in place. Maybe it’s a training issue, or the guidance is confusing, or perhaps it’s a completely different issue.
- Are your competence policies being implemented as intended? (Process evaluation)
This is the assessment of whether your policy is being implemented as intended, and what, in practice is felt to be working well or less well, and why.
Review your measures, outputs, and indicators. What is the quantitative data telling you? Are colleagues not following a particular process consistently? If not, you need to determine why.
Are supervisors completing their record keeping on time and to standard? If not, why? Is the procedure difficult to follow? Too time consuming? Have you introduced a workaround or new technology? Is it a training issue?
Collect qualitative data. Get feedback from colleagues who are implementing this on a day-to-day basis, as well as ideas on areas for improvement.
- Are your competence policies and procedures current and relevant?
If your policies and processes refer to previous roles and structures or old systems, then colleagues are more than likely to ignore them because they don’t think they are important or don’t matter anymore.
You need to ensure they align with current structures and ways of working. Is supervision completed remotely due to working from home arrangements or do hybrid patterns mean remote and in-person supervision is allowed? Update your policy to reflect the agreed supervision arrangements, make expectations and standards clear.
Is industry best practice reflected in what and how you do things? Have you reviewed FCA expectations and networked with other organisations to share views and approaches?
When your firm goes through change assess the impact
When your firm goes through any change, whether that be a large-scale or small, you should review your policies and processes. A shift in strategic direction, a merger or changes to products and customer journeys all necessitate an impact assessment.
Not all business change will impact your policies and processes however, you need to consider whether it does across all your policies, processes, operations, and systems. A good impact assessment process will:
- Determine the size and scope of the impact.
- Ensure a collaboration of views.
- Manage the change implementation.
- Review the change effectiveness.
Changes to laws or regulations
Similarly changes to laws and regulation may also impact your competence policies and processes therefore, using the impact assessment process will ensure your approach is up to date.
Significant regulatory changes like the Senior Managers and Certification Regimes, the IDD, and Mortgage Credit Directive obviously need a wide all-encompassing approach to review the impacts and agree the changes.
Wherever possible the agreed changes should be incorporated as soon as possible, aiding a smoother transition and the opportunity to review and evaluate before the new regulation or law is in effect.
Time for action?
When did you last evaluate your competence frameworks? What were your key findings? How frequently are your reviews scheduled? Do you have a formal impact assessment review process in place to assess business and regulatory changes?