The FSA sets out an industry wide commitment to training

The new approach to T&C requirements is to encourage firms to take responsibility for deciding how their business should best comply with regulatory requirements for training and competence of staff to ensure customer safeguards are maintained.

While allowing some degree of flexibility in the implementation of training all regulated, firms will be required to meet a set of high level commitments:

develop the skills and knowledge and competence of staff;

ensure staff remain competent;

put in place and maintain adequate supervision of staff;

regularly review staff training needs.

David Jackman, the FSAs Head of Industry Training said:

"Ensuring high standards of training and competence is a prerequisite to achieving consumer protection. Well-run businesses are built on skilled and knowledgeable staff.

"Training should not be entered into as a mechanical function but as part of the business culture focusing on being more responsive to the customers needs. Our approach recognises firms are not all the same and offers room for firms to shape the regime to their business needs and those of their customers."

Extension of scope to strengthen consumer safeguards

The FSA are also proposing to strengthen consumer safeguards by requiring all firms to extend the scope of training and competence to staff dealing with functions where specific risks can be identified, such as administration of life policies and pensions.

PIA Ombudsman reports, for example, point to the high volume of complaints from consumers relating to administration. Research has indicated that positive results can be achieved by extending competence requirements to supervisors in the back office.

The commitments provide the framework for the rules and guidance that consist of five linked components:

Recruitment - suitable checks should be made of an employees knowledge and skills against those requirements for the job and that relevant information is sought to verify past training and experience;

Training- assessments should be made to determine the training needs of employees in respect of their roles. Training can be given in a variety of ways such as on-the-job learning, distance learning as well as attending formal courses;

Attaining competence - the firm must satisfy itself that the employee has attained competence and have passed, as a minimum, the relevant Approved Examination;

Maintaining competence - when competence is achieved, a firm must ensure that the employee remains competent. Where an employees role develops or changes, the firm will need to reconsider the standards of competence necessary for the role;

Supervising competence - a firm should ensure adequate supervision for an employee who is not yet competent. It is also important that once an employee has attained competence, appropriate systems and controls are set up to monitor employees competence.

The FSA will be organising a series of Consultation Roadshows around the UK seeking views on proposals for the new T&C requirements

Notes for editors

The FSA would welcome comments on this the Training and Competence sourcebook by 29 February 2000.

The Training and Competence sourcebook contains a complete set of draft rules and guidance which will form part of the FSAs Handbook.

The Consultation paper follows considerable discussion with industry bodies institutes and firms.

Transitional arrangements. As a general rule employees of firms deemed to be competent under the current requirements will be regarded as competent in the same roles under the new requirements. An overall approach to transitional arrangements will be consulted on by the FSA in the future.

Investment business activities currently subject to the existing T&C regime will become subject to the new rules and guidance within a short period after the Financial Services and Markets Bill comes into operation.

The Training Advisory Panel (TAP) consists of 13 practitioners and one consumer interest representative and four observers from educational and trade union backgrounds. TAP has been established to advise the FSA on: policies and arrangements for the assessment of competence and the promotion of training within authorised businesses; approval of examinations for regulatory purposes.

Examinations. The existing examinations applying to the different regimes Self Regulatory Organisation (SROs) will be harmonised in the future to ensure a consistent set of standards throughout the industry. Over the next few years the FSA guided by TAP, together with other outside bodies including the curriculum authorities, National Training Organisation and relevant institutes will consider examinations standards. Each stage will involve consultation.

Copies of Consultation paper 34 "Training and Competence sourcebook" are available by sending a cheque made payable to the FSA to FSA Publications, 25 The North Colonnade, Canary Wharf, London, E14 5HS