How Fit For Purpose Are Your T&C Arrangements – Part 2

Julie Pardy

Julie Pardy

With more than 30 years service in the Financial Services industry Julie has spent many years at the coal face undertaking a wide variety of roles in banking from Compliance to Sales, Operations to Training.

Training & Competence (T&C) has been a regulatory requirement of the Financial Conduct Authority (FCA) since the late 1990’s.  As such, it doesn’t grab the headlines the way more recent regulation, such as MIFID II Knowledge and Competence, Insurance Distribution Directive and Senior Managers & Certification Regime have. However, these newer regimes all have the same underlying theme, that being key staff have, and evidence, the knowledge and competence necessary for them to fulfil their jobs effectively. As a result, activities like regular performance reviews, ‘on the job’ observations, programmes of continuing professional development (CPD) and robust record keeping supported by effective monitoring have never been more relevant. Therefore, whilst not necessarily grabbing the headlines, never have the principles and underlying activities of T&C been more relevant.

This is the second of a series of three special, extended blogs designed to help you review the fitness of your T&C or wider competence management arrangements and, in doing so, that underpin your organisation’s compliance with a range of regulation.

Click here for the next blog in this series;

For ease, this blog is laid out four sections, each focusing on a different stage of the T&C journey from a users’ perspective, i.e. from recruiting new staff to the point at which they are fully competent. Each section is laid out as a series of questions and answers;

Recruitment / Induction

  • How are the skills and knowledge requirements established?

There will be some generic skills and knowledge requirements for all staff in your T&C scheme(s). There will also be some specific skills and knowledge requirements for the each of the different roles in your scheme(s). The skills and knowledge required will most likely be a mix of professional qualifications, e.g. CeMAP qualifications for mortgage advisors, job related skills, e.g. questioning and listening, and organisation based, e.g. understanding company standards and processes. The exact mix of skills, knowledge and qualifications should be carefully researched and be tailored to the needs of each role.

  • How is the “analysis gap” undertaken and by whom?

With SM&CR, there is a requirement to provide regulatory references on any staff that were under that regime. Therefore, if staff are being recruited from within the industry, there is a good chance that you will have detailed information on the person that will enable a gap analysis to be made relatively easily. For other staff, qualifications aside, gap analysis will require a more rigorous process. Typically, this will involve a mix of paper tests and behavioural observations by qualified staff, e.g. T&C supervisors, HR Advisors etc., as part of the recruitment process.

  • How are the gaps transferred to individual training plans?

If the gap analysis is carried out in a rigorous way, the training plan should be straightforward to create. Progress against this plan and eventual sign-off of meeting minimum standards can then be measured during the early weeks/months of the employment, i.e. as part of induction.

  • At what point may a recruit commence client activities and is this satisfactory?

All good T&C schemes will have levels which take an individual through from ‘new recruit’ status to fully competent. These levels should also define what activities an individual can and, importantly, can’t undertake without supervision. Sign off to being able to undertake different activities, including client facing activities, should be done by either dedicated T&C supervisors, line manages or both. Again, client contact is usually tightly controlled in the early weeks/months of employment.

  • What information should be given to a new recruit about the scheme requirements?

Best practice is that the new recruit should get full information on the T&C scheme, i.e. scheme purpose, standards, stages, activities, sign-offs etc. Some information, e.g. entry level requirements and general scheme standards should be provided as part of the recruitment process. Further information can be provided on appointment.

Attaining Competence

  • How is competence defined?

Competence definitions, down to behavioural statements, for each T&C stage i.e. ‘is able to….’, ‘asks open questions to…’ etc. should be part of the T&C Scheme’s overall design. Building this level of detail into the T&C scheme makes supervision more straightforward and it easier for the employee to understand their strengths and development areas.

  • What procedures are in place to help someone attain competence?

Best practice T&C schemes specify both a frequency of activities, e.g. weekly, monthly etc., observations, they also specify the number of ‘successful’ activities required before being able to move to next stage of competence, e.g. 3 successive successful activities.

  • What measures are in place to assess competence?

Of course, assessing competence depends on the nature of the competence itself. Some lend themselves to written tests, e.g. proposal/report writing, whilst others are best assessed via observation, e.g. client interviews. In either case, the assessor needs to have both clear documentation that allow the assessments to be undertaken in a straightforward manner, e.g. behavioural checklists, the assessors themselves also need to be trained.

  • Who is responsible for assessing competence and do they know how to?

Responsibility for making the assessments in T&C Schemes varies across different organisations. However, responsibility tends to fall to the staff member’s immediate line manager, dedicated T&C supervisors or, in some cases, a mix of both. In either case, the T&C scheme should define who assesses what activities, with what frequency and to what level. Best practice T&C schemes will ensure initial training for supervisors, plus a programme of Continuing Professional Development (CPD) to ensure their ability to supervise to the highest standards is maintained.

  • Are limits of authority set, known and adhered to?

Again, best practice T&C schemes should define things like authority levels and escalations for first level supervisors, be they line managers or T&C supervisors. However, all schemes should have central oversight, from a central T&C, compliance or HR team. Central oversight will ensure standards are monitored and maintained.

  • What supervision is in place for advisers who are not yet competent?

The main purpose of an ‘attaining competence’ stage of competence, is to ‘transition’ staff who have passed induction to a point where they can be trusted to undertake aspects of the job independently. As such, the level of supervision is set accordingly, i.e. less invasive than the induction stage but more so than the ‘fully competent’ stage. An example would be observations could be monthly for an individual whilst in attaining competence and quarterly for an individual who has achieved full competence. 

  • If set, are timescales being achieved? If not, what actions are taken?

The scheme should define what happens if the activities in the scheme are not successfully undertaken. Most schemes allow for a degree of ‘fails’, e.g. if an observation is not passed or a knowledge test failed. However, T&C schemes should also specify what happens if a member of staff develops a pattern of ‘fails’ or the expected timescales to progress through that stage of competence is taking longer than expected (without good reason).

The remedial action varies across companies but, typically, where an individual has repeated fails that are out of the norm, then a remedy can be that the individual receives a higher level of supervision until such time as performance improves and is maintained at a pre-defined level.

Maintaining Competence

  • How is competence defined?

The methods of defining competence should be the same as previous stages, i.e. detailed competence definitions, down to behavioural statements etc. Because of the stage, i.e. ‘maintaining competence’, the behavioural standard should be that much higher, e.g. ‘always does….’ rather than ‘usually does’ (which would be a more expected definition at the ‘attaining competence’ stage).

  • What arrangements are in place to identify whether competence is maintained?

Again, the scheme should specify not only the activities but the regularity that they are undertaken, e.g. quarterly 1:1s rather than monthly (which would be a more likely frequency at the ‘attaining competence’ stage). Successfully undertaking these activities would confirm competence is being maintained.

  • How often is competence assessed and why this timescale?

The frequency of assessment is a matter of judgement for every stage of the T&C scheme. Frequency will depend on the nature of the organisation’s business model, it’s appetite for risk and its products/services. Based in these factors, decisions should be made about the frequency of competence assessment.

  • Is competence being measured accurately?

Careful design of the competence assessment tools, e.g. behavioural checklists will make the task of assessing easier. However, the extent to which assessments are conducted accurately depend on the quality of the supervisory group conducting the assessments. For assessments to achieve consistent standards, this supervisory group also need to undergo the training and CPD outlined above. Attention needs to monitor changes of supervisor and ensure new supervisors undergo training before they are allowed to assess staff in the T&C scheme.  

  • What procedures are in place if competence has not been maintained?

Typically, similar processes are in place for managing exceptions at the ‘maintaining competence’ stage as are at the earlier stages, (see answer above – ‘attaining competence’). 

  • Who is responsible for assessing competence?

Again, it is typical for the supervisory group to be composed of a similar mix of managers to previous T&C stages.

  • Are individuals staying within their limits of authority?

This should be one of the monitoring tasks picked up by the central team. They should review the pattern of assessments versus other metrics for that member of staff. For example, if an individual is achieving very positive assessments from the line manager, but business performance is mixed or other factors are negative, such as customer complaints, then the line manager’s assessments should be reviewed. To mitigate against this, some T&C schemes have a planned programme of rotation for supervisors, e.g. every third or fifth review is conducted by someone other than the normal supervisor. This type of rotation tends to identify potential problems early and helps ensure consistency of supervisory standards across the T&C scheme.

  • How can individuals grow their knowledge, skills and experience?

Every individual in the T&C scheme, individuals and supervisors alike, should have to meet minimum ‘entry’ standards. Once passed, programmes of CPD should be in place for everyone.


  •  How are supervisory numbers determined?

Supervisory numbers are straightforward if the line manager is assigned to be the T&C supervisor. The only questions in this situation are around the amount of line manager time required and the level of central oversight required. Organisations adopting the specialist, dedicated approach to supervision have to decide the ratio of supervisors to staff requiring supervision. This ratio is often called ‘span of control’. Spans of control vary across organisations, variations are based on a number of factors, e.g. appetite to risk, products/services etc. Ultimately, this the span of control is a judgement based on these factors.

  • How are supervisory responsibilities decided?

Responsibilities should be defined and documented as part of the T&C scheme. Without this clarity, things risk becoming very fragmented, with the consequential risk to overall standards.

  • How is the consistency and effectiveness of supervision determined?

Approaches vary, some organisations use peer assessments, i.e. two supervisors observe the same activity, as a way of moderating ratings and achieve consistency. A variation on this is ‘guest supervisors’, i.e. usually where a member of the central team stands in for the usual supervisor. Other organisations use the central team to conduct more statistical analysis of supervisors’ ratings over time (and contrast this with other metrics on the staff member).

In summary, no single method can guarantee that consistency is being achieved across the supervisor community. However, the key thing is to have processes in place to promote consistency and mitigate against extreme inconsistency.

  • How is the competence of supervisors assessed, by whom and how often?

Supervisors should also be part of the T&C scheme. In other words, supervisors need to successfully complete a range of activities throughout their employment to demonstrate both their initial capability to assess staff in the scheme and their continuing ability to perform the supervisory role. Supervisors’ competence should be verified by a programme of CPD and annual checks, as described above by peers and/or the central team.

  • How are the training needs of supervisors identified and addressed?

This question goes back to the fundamentals of T&C scheme design. The skills and knowledge required by T&C supervisors needs to be defined and documented alongside the activities necessary to prove and retain that competence. These activities need to be monitored by the central team.

  • What measures are in place to deal with non-competent supervisors?

If supervisors fall below the standards expected of them in the T&C scheme, like the people they manage who are also in the T&C scheme, there needs to be a clear process of remediation that brings them back to the standards expected by supervisors.

  • What arrangements are in place to supervise Advisers if their Supervisor becomes non- competent?

In the situation where the supervisor of a member of the T&C scheme is deemed non-competent, another supervisor, or a member of the central team, must pick up the responsibilities of that supervisor. It is crucial for both the integrity of the T&C scheme and risks posed to the organisation that the member of staff is not left unsupervised.

The same arrangements should apply if the supervisor is unable to conduct his/her supervisory duties for any other reason, e.g. holiday, long term sickness etc.

Following on from the first blog in his series, hopefully these questions have provoked further thought as to your approach to T&C within your organisations.   And in parallel, our responses will hopefully have provided some insight into how you can define T&C arrangements within your organisation.

The third blog in this series considers key issues such as recruiting into roles that are part of a T & C scheme, the stages of competence and supervision. 


Latest Blogs