The FSA has released CP 10/12 – “Competence and ethics”.
The Code of Practice for Approved Persons (APER) will have some amendments, chief of which will be the addition of APER 4.5.13A which will require those holding a significant influence function (basically all controlled functions bar the CF 30 customer function) to satisfy themselves that the area of business that they are responsible for has appropriate procedures in place to measure the competence of each individual member of staff.
The remainder of the paper largely concerns changes to the FSA’s Training and Competence (TC) requirements so will be relevant to firms which have retail clients. Having said this, and in keeping with SYSC5.1.4A, many non-retail firms take TC into account when complying with the training and competence requirements in SYSC. Such firms may also wish to consider the new CP.
Proposals include imposing a 30 month time limit in which an individual must pass all required exams; the removal of ‘grandfathering’ provisions so that all affected individuals must pass the required exams; and the reintroduction to TC of a list of qualifications that meet the FSA’s requirements.
The major impact is upon the advice element that a firm may offer and is a consequence of the Retail Distribution Review.
We know that many firms use the IMC as a competence benchmark (see Regulatory Roundup #11 for changes being made to the IMC).By way of example, discretionary portfolio managers that do not advise will not be affected. However those discretionary portfolio managers that also offer advice will find that the IMC will cease to be an acceptable qualification after 31 December 2012.This is illustrated in Appendix 4R of the draft TC. In Table 11 (managing investments) the IMC is acceptable whereas in Table 2 (advising on securities) the IMC is only valid until 31 December 2010. The link in Regulatory Roundup #11 will allow the download of an explanatory brochure.
The proposed draft rules can be found in Appendix 1 of the CP.
The consultation period ends 6 September 2010.
