The Financial Regulator has published a consultation paper reviewing the Minimum Competency Requirements for financial services firms. The Minimum Competency Requirements were introduced in 2007 as a knowledge standard for staff of all financial firms providing services to consumers.

Under the current requirements, firms must ensure that individuals who provide advice on or sell retail financial products or undertake certain specified activities1 meet the minimum required standards, either though holding a recognised qualification or working in the industry for a specified period of time. Specific knowledge requirements apply for retail financial products and qualifications to meet the requirements are set out. Individuals are also required to undertake a programme of Continuing Professional Development (CPD) on an ongoing basis. Specified activities include claims administration, reinsurance intermediation, management of accredited individuals and adjudicating on complaints.

In light of experience and market developments since the requirements were introduced, several amendments are being considered to enhance the regulations.

The Financial Regulator is seeking views on the following proposals:

• Changing the current three-year cycle for CPD to an annual requirement. The new annual requirement, which will only be made up of formal development hours that can be verified, will be 15 formal hours.
• To ensure a consistent standard across the industry, the Financial Regulator is considering phasing out ‘grandfathering arrangements'2 over a four-year period so that all grandfathered individuals will have to achieve a recognised qualification by 2015.
• Firms are currently required to make a register of accredited individuals acting on their behalf available to the public on request. Some firms have raised concerns that this may result in security risks so as an alternative to this requirement, it is proposed that firms will have the option of providing each accredited individual with a certificate setting out the areas where he/she meets the requirements that can be provided to consumers on request.
• Detailed requirements are proposed setting out the records which must be maintained by the regulated firm in order to demonstrate compliance with the Requirements, including holding records which demonstrate compliance with CPD requirements and ensuring written records are maintained for new entrants.

Article Published: 30/06/2010