TC 2.1 Assessing and maintaining competence13
Assessment of competence and supervision
- (1)
13A firm must not assess an employee as competent to carry on an activity in TC Appendix 1 until the employee has demonstrated the necessary competence to do so and has (if required by TC Appendix 1) attained 16each module of an appropriate qualification16. This assessment need not take place before the employee starts to carry on the activity.14
161613 - (2)
A firm may assess an employee who is subject to, but has not satisfied, an appropriate qualification16requirement as competent to the extent that:14
16
A firm must not allow an employee to carry on an activity in TC Appendix 1 without appropriate supervision.
Firms should ensure that employees are appropriately supervised at all times. It is expected that the level and intensity of that supervision will be significantly greater in the period before the firm has assessed the employee as competent, than after. A firm should therefore have clear criteria and procedures relating to the specific point at which the employee is assessed as competent in order to be able to demonstrate when and why a reduced level of supervision may be considered appropriate. At all stages firms should consider the level of relevant experience of an employee when determining the level of supervision required.
Supervisors
Firms should ensure that those supervising employees carrying on an activity in TC Appendix 1 have the necessary coaching and assessment skills as well as technical knowledge to act as a competent supervisor and assessor. In particular firms should consider whether it is appropriate to require those supervising employees not assessed as competent to attain 16an appropriate qualification 16as well except where the employee is giving advice on packaged products, see TC 2.1.5 R.
1616Qualification requirements before starting activities16
A firm must ensure that an employee does not carry on any of the following activities without first attaining 16each module of an appropriate qualification:16
16- (1)
[deleted]16
16 - (1A)
16advising on and dealing in securities which are not stakeholder pension schemes or broker funds;
- (1B)
advising on and dealing in derivatives;
- (2)
the activity of a broker fund adviser;
- (3)
- (4)
the activity of a pension transfer specialist.
Exemption from appropriate qualification requirements16
- (1)
If a firm is satisfied that an employee meets the conditions in this rule then the requirements to have attained 16each module of an appropriate qualification 16will only apply if that employee is carrying on one of the activities specified in this rule.
1616 - (2)
The conditions are that a firm should be satisfied that an employee:
- (a)
has at least three years' up-to-date relevant experience in the activity in question obtained while employed outside the United Kingdom;
- (b)
has not previously been required to comply fully with the relevant qualification 16requirements in TC 2.1.1 R; and
16 - (c)
has passed the relevant regulatory module of an appropriate qualification16;
16
but (b) and (c) do not apply to an employee who is benefiting from the "30-day rule" exemption in SUP 10.10.7B R, unless the employee benefits from that rule because he is advising retail clients on packaged products or is a broker fund adviser.
- (a)
- (3)
The relevant activities are:
- (a)
advising on investments which are packaged products, if that advice is given to retail clients;
- (b)
the activity of a broker fund adviser;
- (c)
- (d)
the activity of a pension transfer specialist.
- (a)
Selecting an appropriate qualification17
- (1)
This rule applies for the purposes of TC 2.1.1 R, TC 2.1.5 R, TC 2.1.6 R, TC 2.1.7 R ,16TC 2.1.9 R, TC 2.2A.1 R, TC 2.2A.3 R and TC 2.2A.6 R16.
- (2)
To ensure that a qualification16 is appropriate, a firm should select an appropriate qualification from the list of qualifications set out in TC Appendix 4E16.
1616 - (3)
Contravention of 16 (2) may be relied on as tending to establish contravention of 16the rules referred to in (1).
1616
16TC Appendix 5G sets out:
- (1)
the criteria which the FSA may take into account when assessing a qualification provider; and
- (2)
the information the FSA will expect the qualification provider to provide if it asks the FSA to add a qualification to the list of appropriate qualifications in TC Appendix 4E.
- (1)
17TC Appendix 6G sets out guidance in relation to accredited bodies.
- (2)
TC Appendix 7G sets out guidance on gap-filling in relation to appropriate qualifications and the function of accredited bodies in that regard.
Training needs
Firms should ensure that their employees' training needs are assessed at the outset and at regular intervals (including if their role changes). Appropriate training and support should be provided to ensure that any relevant training needs are satisfied. Firms should also review at regular intervals the quality and effectiveness of such training.
Maintaining competence
A firm must review on a regular and frequent basis employees' competence and take appropriate action to ensure that they remain competent for their role.
17[to follow]
Notification requirements
17A firm must notify the FSA as soon as reasonably practicable after it becomes aware, or has information which reasonably suggests, that any of the following events has occurred or may have occurred in relation to any of its retail investment advisers, and the event is significant:
- (1)
a retail investment adviser, who has been assessed as competent for the purposes of TC 2.1.1 R, is no longer considered competent for those purposes;
- (2)
a retail investment adviser has failed to attain an appropriate qualification within the time limit prescribed by TC 2.2A.1R (1);
- (3)
a retail investment adviser has failed to comply with a Statement of Principle in carrying out his controlled function; and
- (4)
a retail investment adviser has performed an activity in TC Appendix 1 before having demonstrated the necessary competence for the purposes of TC 2.1.1 R and without appropriate supervision.
17When considering whether an event is significant a firm should include the following in its considerations:
- (1)
the potential risk of consumer detriment as a result of the event;
- (2)
whether the event or a pattern of events indicate recurrent issues in relation to one or more retail investment advisers; and
- (3)
its obligations under Principle 11.
17The Retail Investment Adviser Competence Notification Form approved by the FSA for notifications under TC 2.1.31 R may be found at the FSA's website www.fsa.gov.uk/Pages/Doing/Regulated/Notify/index.shtml.