TC 2.1 Assessing and maintaining competence13

1. (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. (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
   1. (a)

      that employee works in a branch in an EEA State other than the United Kingdom;14

   2. (b)

      the employee is engaging in MiFID business; and14

   3. (c)

      there is no appropriate qualification 16or equivalent in that EEA State.14

      16

A firm must not allow an employee to carry on an activity in TC Appendix 1 without appropriate supervision.

Where an employee has not been assessed as competent to do so and: 24

1. (1)

   24gives personal recommendations25 on retail investment products to retail clients24, the firm must ensure that the individual supervising and assessing that employee has attained an appropriate qualification24; or

2. (2)

   24gives advice on P2P agreements to retail clients, the firm must ensure that the individual supervising and assessing that employee has attained an appropriate qualification for giving personal recommendations25 on retail investment products to retail clients.

19TC 2.1.5B R and TC 2.1.5C R apply to a firm acting as an MCD creditor or an MCD credit intermediary.

19A firm must ensure that an employee does not carry on any of the activities 23A to 23E in TC Appendix 1 without having an appropriate level of knowledge and competence, which includes an appropriate:

1. (1)

   knowledge of MCD credit agreements and any ancillary services offered by the firm with them;

2. (2)

   knowledge of the laws relating to MCD credit agreements for consumers (in particular, consumer protection);

3. (3)

   knowledge and understanding of the property purchasing process;

4. (4)

   knowledge of security valuation;

5. (5)

   knowledge of the organisation and functioning of land registers;

6. (6)

   knowledge of the market;

7. (7)

   knowledge of business ethics standards;

8. (8)

   knowledge of the process of assessing a consumer's creditworthiness or, where applicable, competence in assessing the consumer's creditworthiness; and

9. (9)

   level of financial and economic competency.

[Note: article 9 and annex III (1) of the MCD]

19A firm must not assess knowledge and competence based solely on relevant professional experience. It should also take into account relevant professional qualifications, such as diplomas and degrees, training and competency tests.

19A firm must, for the purposes of TC 2.1.5B R, take into account the nature of the employee's role and their level of responsibility within the firm and decide the appropriate level of knowledge and competence for that employee.

24TC 2.1.5HR applies to a firm advising on P2P agreements.

24A firm must not, for the purposes of TC 2.1.1R, assess an employee as competent to carry on activity 9A in TC Appendix 1 until the employee has attained each module of an appropriate qualification for giving personal recommendations25 on retail investment products to retail clients.

A firm must ensure that an employee does not carry on an activity in TC Appendix 1 (other than an overseeing activity) for which there is a qualification 16requirement without first attaining16 the relevant regulatory module of24:

1. (1)

   24(in respect of activities other than advising on P2P agreements (activity 9A in TC Appendix 1)) an appropriate qualification; or

2. (2)

   24(in respect of advising on P2P agreements (activity 9A in TC Appendix 1)) an appropriate qualification for giving personal recommendations25 on retail investment products to retail clients.

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

1. (1)

   [deleted]16

   16
2. (1A)

   giving personal recommendations25 on and dealing in securities which are not stakeholder pension schemes, personal pension schemes 18 or broker funds;

   16
3. (1B)

   giving personal recommendations25 on and dealing in derivatives;

4. (2)

   the activity of a broker fund adviser;

5. (3)

   advising on syndicate participation at Lloyd's; or

6. (4)

   the activity of a pension transfer specialist.

17A firm must ensure that an employee who was assessed as competent as a retail investment adviser for the purposes of TC 2.1.1 R at 30 June 2009 does not carry on the activity of a retail investment adviser without first attaining an appropriate qualification.

1. (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. (2)

   The conditions are that a firm should be satisfied that an employee:

   1. (a)

      has at least three years' up-to-date relevant experience in the activity in question obtained while employed outside the United Kingdom;

   2. (b)

      has not previously been required to comply fully with the relevant qualification 16requirements in TC 2.1.1 R; and

      16
   3. (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 10A.10.8 R or the "14-day rule" exemption in SYSC 5.2.28AR22, unless the employee benefits from that rule because he is giving personal recommendations to25 retail clients on retail investment products24, is providing advice on P2P agreements to retail clients24 retail investment products17 or is a broker fund adviser.

   353517
3. (3)

   The relevant activities are:

   1. (a)

      giving personal recommendations on25 retail investment products25 to retail clients;24 or

      241717
   2. (aa)

      24advising on P2P agreements, if that advice is given to retail clients; or

   3. (b)

      the activity of a broker fund adviser;24 or

   4. (c)

      advising on syndicate participation at Lloyd's; or

   5. (d)

      the activity of a pension transfer specialist.

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.

Subject to TC 2.1.17 R, a firm must ensure that a retail investment adviser who has been assessed as competent for the purposes of TC 2.1.1 R remains competent by completing a minimum of 35 hours of appropriate continuing professional development in each 12 month period.17

A firm is permitted to suspend the requirements of TC 2.1.15 R in respect of a retail investment adviser for the period of time during which the retail investment adviser is continuously absent from work, if that absence is due to:

1. (1)

   maternity, paternity or adoption leave;

2. (2)

   long-term illness or disability;

3. (3)

   caring responsibilities for a family member who has a long-term illness or disability; or

4. (4)

   any other absence allowed in order for the firm to meet its statutory duties in relation to equality and diversity.17

A firm must, for the purposes of TC 3.1.1 R (Record keeping), make and retain records of:

1. (1)

   the continuing professional development completed by eachretail investment adviser;

   and

2. (2)

   the dates of and reasons for any suspension of the continuing professional development requirements under TC 2.1.17 R.17

A firm must not prevent a retail investment adviser from obtaining a copy of the records relating to that retail investment adviser which are maintained by the firm for the purposes of TC 2.1.24 R.17

A firm must ensure that a retail investment adviser confirms annually in writing that the retail investment adviser has, in the preceding 12 months:

1. (1)

   complied with APER or COCON (as applicable)20; and

2. (2)

   if applicable, completed the continuing professional development required under TC 2.1.15 R. 17

A firm must obtain from an accredited body independent verification of the firm's compliance with:

1. (1)

   in respect of its retail investment advisers only, the requirement in TC 2.1.1 R to attain each module of an appropriate qualification;

2. (2)

   TC 2.1.15 R; and

3. (3)

   TC 2.1.26 R.17

The independent verification in TC 2.1.27 R must be obtained by a firm:

1. (1)

   in respect of a competent retail investment adviser who began to carry on the activity of a retail investment adviser on or before 31 December 2012, within 60 days of that date and of the anniversary of that date thereafter;

2. (2)

   in respect of a retail investment adviser who began to carry on the activity of a retail investment adviser on or after 1 January 2013, within 60 days of the date on which the retail investment adviser was assessed as competent as a retail investment adviser and of the anniversary of that date thereafter.17

17A firm must notify the FCA 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. (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. (2)

   a retail investment adviser has failed to attain an appropriate qualification within the time limit prescribed by TC 2.2A.1R (1);

3. (3)

   a retail investment adviser has failed to comply with a Statement of Principle in carrying out their20 controlled function or has failed to comply with COCON (as applicable)20; and

4. (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.