The Importance of a T&C Scheme

Last month we hosted another of our MASTER events, with the focus of August’s session being training and competency (T&C). This four-hour interactive session was led by our own Christian Markwick and Paul Sylvester-Evans, who were well suited to this topic, as they head up ‘Enable‘ – our training and competency service.

So, why are we talking about training and competency so much? Did it really warrant a four-hour training session?

The short answer is yes. It really did.

Since the launch of Enable we have been inundated by requests from our firms for assistance with their training and competency schemes, and asking us how exactly do you define an effective T&C scheme?

Before we dive into that, let’s take it back a step and look at the context. T&C is part of the regulators ‘fit and proper’ regulation. It was originally introduced to ensure advisers were appropriately qualified and trained for the role they were in and to protect consumers. What is expected as part of an individual’s T&C assessment has developed over the years and therefore it is important to know what is required.

T&C rules apply to senior managers, certified staff and non-executive directors. Although staff members such as admin staff and paraplanners are not covered here, good practice would be to still include these roles in your internal T&C Scheme as themselves, the business and your clients can benefit from this.

A firm should ensure its T&C framework is documented and reviewed when necessary.

As well as the required compliance aspect to the training, T&C is a little bit different to your standard regulatory requirement, as it focuses on the personal development of each individual involved rather than the standard set of rules and guidelines. Included in T&C should be an individual’s training needs analysis (which does what it says on the tin – focuses on the individual’s need for certain training in certain areas), and also personal development plans should be used to highlight the employee’s professional aspirations. This helps the firm and the employee remain on track in terms of regulatory requirements (compliance musts) as well as providing the necessary support for their team members.

T&C should be monitored throughout the year and can be highlighted in the employee’s annual appraisal. The firm’s T&C policy will form part of the Fit and Proper assessment which needs to be reviewed on an annual basis to ensure that the adviser/employee is not a risk to the firm and/ or the client. This all feeds into the FCA’s key focuses – honesty, integrity and reputation. Financial soundness also comes into the mix, which is why it is important to conduct background checks for each individual in the scheme – such as criminal records checks and credit checks.

In short, an individual cannot carry out advice without the relevant supervision or training. This is to minimise the risk of detriment to the customer and the firm involved. The level of supervision required depends on the employee’s experience and status. Therefore, it is important to regularly assess staff and be able to evidence their competency. More so now SM&CR has come into play.

T&C schemes are paramount to the success of a compliant business, and they require resource dedicated specifically to it. We at Apricity created Enable to help firms who do not wish to manage this process internally. If you would like further guidance from the Apricity team, or to hear about our Enable service, don’t hesitate to get in touch!

Hannah Scott – Adviser Support