SIFA 10.3 Rules And Guidance

Being competent means being able to show the relevant individual has and maintains the necessary knowledge, skills and experience to do the job and does it to the required standard effectively and consistently. Once assessed as competent the individual can act without being supervised.

Competence is made up of:

• application of knowledge and skills; and
• appropriate examination passes.

Knowledge and skills must be assessed, measured and improved where necessary.

The activity in the Training and Competence sourcebook most likely to be carried out by a small advisory firm is TC 2.1.4 G 1(f) - 'Employees engaging in advising on investments, which are packaged products (other than broker funds or long-term care insurance contracts)'.

If employees advise on long-term care insurance (LTCI) contracts (under TC 2.1.4 G 1(ha)), they must be competent to advise on LTCI contracts (under TC 2.4.5 R). This activity became a regulated activity on 31 October 2004. LTCI contract advisers who were deemed competent at that date under a transitional provision in TC do not have to pass an appropriate LTCI examination at the moment. However, this transitional provision remains in force only until 30 October 2006. The effect of this is that LTCI contract advisers deemed competent under the transitional provision must have passed an appropriate LTCI examination before 31 October 2006. Firms whose employees advise on LTCI contracts should also consider whether TC 2.5.5A R applies.

If employees provide basic advice on stakeholder products, there is no examination requirement. However, the firm must still assess them as competent before they can give this type of advice without being supervised.

We no longer include a list of approved examinations in TC. Instead, the Financial Services Skills Council (FSSC) maintains a list of 'appropriate examinations' from which firms can select an appropriate exam(s). The list of appropriate exams is on the FSSC's website: www.fssc.org.uk/cgi-bin/go.pl/exams/index.html

In applying the T&C rules you should consider the following:

• Who do the rules apply to? (TC 2.1)
• What is the existing level of knowledge and skills of the individual? (TC 2.2, TC 2.3)
• What knowledge and skills are required to carry out the role to an adequate standard? (TC 2.4)
• What action such as training is required to fill the gaps? (TC 2.3)
• How is it known whether the training has worked? (TC 2.3)
• How to measure the level of knowledge and skills already achieved and compare this with the level required? (TC 2.4)
• What are the time limits for passing an appropriate examination? (TC 2.5)
• Once achieved, how is competence to be maintained? (TC 2.6)
• What arrangements need to be in place to ensure that non-competent employees are appropriately supervised? (TC 2.7)
• What arrangements need to be in place to ensure that competent employees are appropriately monitored? (TC 2.7)