A Guide to Creating a T&C Scheme

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A Guide to Creating a T&C Scheme

Contents Heading

Summary

Introduction

  • When the document was approved for use and by whom, for example, the Directors or Partners;
  • Who it applies to, for example, all staff connected with regulated activity;
  • Who is responsible for maintaining it

Recruitment


Role Profiles

The job description or role profile is the foundation for recording competence. You should state:
  • That they are required for all jobs;
  • Where the record is help;
  • How they are kept up to date and relevant

Approved Persons/Certification Regime

This sets out the recruitment process:
  • How competence of applicants will be tested and by whom;
  • What the minimum period for referencing is;
  • How gaps in employment will be investigated, explained and evidence obtained;
  • What is unacceptable, for example, someone who is an undischarged bankrupt;
  • Whether a DBS check is required;
  • Whether a credit check is required;
  • When the applicant completes the application for authorisation;
  • Who sends it to the FCA;
  • The person cannot take up their responsibilities until approval is received;
  • What changes have to be notified to the FCA;
  • How on-going Fitness and Propriety will be monitored.

Others

As per Approved Persons and those subject to the Certification Regime, your aim here is to ensure that staff are suitable. However, the referencing and checking may be less onerous

Attaining Competence: Induction

New starters should be briefed about the firm upon their arrival i.e. its culture, values, history, what behaviour is expected, what products and services it offers, who they report to. and most importantly where the tea and coffee facilities are. This applies to everyone and can be formal or informal. For most staff this is where you will explain how they will achieve and be assessed as competent on an ongoing basis. For example, through your annual appraisal or certification process.

All new starters will need appropriate training, either on a face to face basis, or more commonly by eLearning. This training will also need to be repeated on a regular basis to ensure knowledge is retained and new policies and processes are shared as part of maintaining competence.

New to the firm - Financial Advisers / Investment Managers / Mortgage Advisers / Certificated roles

Definitions

Define what a trainee is, i.e. someone who takes up the role for the first time, and what an experienced recruit is i.e. someone who has been signed off as competent at their previous firm.

Attaining Competence

Everyone will need some training to be assessed as a competent individual for your firm. For example, they will not know your procedures and forms for giving advice. If an examination is required to achieve competence this section will state what the appropriate examination is, what support will be given to achieve a pass and the timescales aligned to that achievement. In addition, it will set out:
  • The training they will undertake to achieve competent standards.
  • When that training should be undertaken.
  • Who is responsible for making sure they receive the training.
  • How skills and knowledge will be assessed.

Initial Competence Sign-off

  • What is the measure of competence.
  • How long they have to achieve competence sign-off
  • Who will assess them
  • When will they be assessed
  • What evidence of competence is needed
  • What happens if they cannot achieve that standard

Competent Advisers / Investment Managers / Mortgage Advisers / Certificated Roles

Definitions

Individuals who have been signed of as competent by your firm

Long term absence

What happens on their return to work after a long absence, e.g. 6 months or more?

Short term absence

What happens if they are away for a shorter time to make sure they remain competent when they return?

Supervision

Definitions

Who can supervise advisers

Supervision

What level of supervision is appropriate and when.
  • All staff should be closely supervised until they reach competence.
  • Describe the difference between close supervision / direct supervision and normal supervision levels.
  • Explain what spans of control are appropriate for your different business areas, for example, 1 supervisor for every 12 advisers / investment managers with a maximum of 2 trainees.

Training for supervisors

State what essential knowledge and skills are required for supervising others; for example, assessing performance and competence, monitoring, coaching, presenting etc. (this information should appear in more detail in the role profile).

State whether an external examination is required plus:
  • How will training be delivered;
  • when;
  • by whom.

Competent Sign-off

  • What is the measure of competence
  • How long they have to achieve competent sign-off
  • Who will assess them.
  • When will they be assessed.
  • What evidence of competence is needed
  • What happens if they cannot achieve that standard

Maintaining Competence (CPD)

Definition

In what ways will competence be maintained? How will the essential elements be addressed?
  • Generic knowledge – markets, regulatory and legal requirements
  • Specific knowledge and the firm’s procedures, policies and processes
  • Skills relevant to the role
  • How on-going competence will be measured and when, for example, quarterly for advisers and investment managers and annually for other staff
  • How on ongoing competence will be measured for different groups of staff

Responsibilities

Who is responsible for maintaining competence. For example, will the firm ensure that appropriate training and testing is delivered, or is it the responsibility of the individual? (Bear in mind the FCA’s obligations clearly fall upon the firm).

Will the firm apply for an individual’s Statement of professional standing or will that be left to the individual?

Advisers / Investment Managers, Mortgage Advisers, Certificated Roles

Specific standards e.g. an annual test of generic knowledge post-budget.

Supervisors

Specific standards for supervisors, if any.

CPD Hours

Those individuals in regulated roles that give investment advice need to complete at least 35 hours of CPD per year, of which 21 hours must be structured. There is no mandatory number of hours for other roles but you may want to apply this across the board or set other levels.

Record Keeping

By Staff

What records should staff hold themselves, for example, copies of tests, appraisals, and a competence certificate?

Centrally

What key records will be held centrally by the firm to evidence compliance, for example:

  • Date commenced in the role.
  • Assessment and referencing on joining.
  • Competent sign-off form and evidence.
  • A copy of records to evidence competence is maintained.
  • Copies of regular reviews by supervisors.

Reporting and risk controls

Risk controls

The controls you have put in place to ensure that people follow the procedures, for example:
  • Recruitment files are double checked for completeness.
  • 10% of CDP records are checked to ensure competence is maintained.
  • The % of appraisals/reviews returned when due.


State also who is responsible for doing this and to whom any reports / MI is sent. (It should go to the Approved Person responsible for overseeing the Scheme)

Reporting to the FCA

State the data that will be collected and by whom in order to make returns to the FCA, for example:
  • Total number of staff.
  • Number of advisers.
  • Number assessed as competent.
  • Number of supervisors of advisers.

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