MOGI 3.1 Training and Competence

This chapter of the Guide explains the rules on training and competence. They are in a separate section of our Handbook called the Training and Competence sourcebook (TC). Our rules on training and competence apply to mortgage intermediaries.

If your staff have met the MCCB's Fitness and Competence requirements by 31 October 2004, transitional (or grandfathering) arrangements will apply (see paragraph 3.1.13).

There are two sections in TC. The first section (TC1) contains the Commitments which say that it is firms' responsibility to ensure that individuals:

1. (1)

   are (and remain) competent for the work they do;

2. (2)

   are appropriately supervised;

3. (3)

   have their competence regularly reviewed; and

4. (4)

   have a level of competence appropriate for the nature of the business.

The Commitments apply to any staff associated with a regulated activity.

The second section of TC (TC2) contains detailed requirements that apply in addition to the Commitments, including recruitment, training, attaining and maintaining competence, appropriate examinations, supervising and record keeping.

The requirements in TC1 and TC2 apply to advisers. Unless the transitional arrangements apply, from 31 October 2004 an adviser can only advise on standard mortgages if he has been assessed as competent, or is under appropriate supervision and has passed the regulatory module of an appropriate examination.

To be assessed as competent to advise on standard mortgages, the adviser must have passed an appropriate examination and been assessed as competent to apply the necessary knowledge and skills without supervision. TC 2.4 contains the full details on attaining competence. The Financial Services Skills Council is currently working with examination providers on the development of updated examinations. It will also be issuing lists of appropriate examinations for regulated mortgage activities.

You must make sure that all advisers (including those grandfathered) receive ongoing training and maintain their competence. These should take into account technical knowledge, skills and changes in the market, and changes to products, legislation and regulation. You must also make sure that advisers are appropriately supervised. Supervisors are not themselves required to have passed a mortgage examination. TC 2.6 and 2.7 cover maintaining competence and supervision.

You must keep records to demonstrate that you have complied with the rules in TC2.

Only the Commitments in TC1 apply to sales staff who only carry out non-advised sales of standard mortgages. So they do not need to pass an examination.

The requirements in TC1 and TC2 also apply to those advising on lifetime mortgages. Unless the transitional arrangements apply, from 31 October 2004 lifetime mortgage advisers must take an appropriate lifetime mortgage examination in addition to an appropriate standard mortgage examination. They must also be assessed as competent to apply the necessary knowledge and skills without supervision. Again, the Financial Services Skills Council is working with examination providers on the development of lifetime mortgage examinations.

Only the Commitments in TC1 apply to other staff carrying out non-advised sales of lifetime mortgages. So they do not need to pass an examination.

However, the full training and competence requirements in TC1 and TC2 also apply to staff who supervise non-advised sales and to staff designing scripted questions for us in non-advised sales. So, unless the transitional arrangements apply, from 31 October 2004 they must have passed an appropriate lifetime mortgage examination in addition to an appropriate standard mortgage examination. They must also be assessed as competent to apply the necessary knowledge and skills without supervision.

Where staff carrying out certain activities (set out in 3.1.14) have met the MCCB's Fitness and Competence requirements before 31 October 2004 they do not need to pass any further examination. That means they must have taken an examination as required by the MCCB, and you must have assessed them as competent. However, it is also your responsibility to make sure that they maintain competence (see TC 2.6), so you must ensure that they are familiar with the new mortgage rules. As well as the requirement to maintain competence, the recruitment, training, supervision and record keeping requirements in TC2 will apply after 31 October 2004.

The activities are:

1. (1)

   advising on standard mortgages;

2. (2)

   advising on lifetime mortgages;

3. (3)

   supervising sales staff carrying out non-advised lifetime mortgage sales; and

4. (4)

   designing scripted questions for use in non-advised lifetime mortgage sales.

We are currently consulting on some amendments to TC. These proposed amendments are designed to distinguish between the supervision of staff who are not assessed as competent and the monitoring of staff once they are assessed as competent.

The current wording in TC does not make this distinction and has led to uncertainty at some firms. These proposed amendments are simply to clarify the position and do not change the level of oversight required.