Learning on the go

While competence has always been a feature of the regulatory environment, the retail distribution review makes CPD content, measurement, monitoring and recording of successful learning outcomes a regulated matter.

This is a strategic change for the industry and will be a steep learning curve for firms, individuals, training providers and the regulator too. We will all know by now that the key aim of the professionalism stream of the FSA’s retail distribution review is to raise the standard and quality of advice available to consumers in the financial services sector by enhancing the competence and professionalism of advisers.

However, the FSA has made it clear that it is seeking not just a “one-off increase in knowledge levels” but also continuous maintenance and development of skills and knowledge. Consequently CPD forms a vital ingredient in the RDR enhancements.

The new mandatory regime is already having an impact beyond those immediately affected as advisers. The RDR is part of the broader remit of the approved persons regime. The regime creates personal obligations regarding CPD.

To begin with, all approved persons in significant influence functions (that is, senior management) are required to: “take reasonable steps to ensure that suitable individuals are responsible for those aspects of the business under (their) control” and that issues are delegated only once the approved person is satisfied that: “the delegate had the necessary capacity, competence, knowledge, seniority or skill to deal with the issue or to take authority for dealing with part of the business”.

All approved persons in both significant influence as well as customer functions must act with due skill, care and diligence. For those in retail customer functions this includes meeting: “the standards of knowledge and skill set out in the Training and Competence sourcebook”. This places a personal responsibility for CPD onto individual approved persons and for those in the retail industry this is where the RDR fits in.

Consequently:

* The onus remains on firms to require their retail investment advisers to undertake appropriate and sufficient CPD

* Firms are obliged to ensure their advisers confirm annually their compliance with the approved persons regime and to have completed the required CPD. Firms are required to obtain independent verification of each adviser’s professional standing (including their CPD) through the SPSs issued by an accredited body.

* Firms’ training and competence schemes provide the key mechanism to ensure that advisers become competent, are supervised effectively and meet their CPD obligations. As such, firms’ arrangements form the bedrock for the effective management and verification of the competence and professionalism of their advisers.