FSA review finds insufficient evidence of training and competence

More than a third of general insurance brokers lack sufficient systems to show they are meeting training and competence (T&C) requirements, an FSA review has found.

The regulator looked at the T&C arrangements of 100 firms and found that only 63% of brokers had arrangements in place that were appropriate for their business.

The FSA said of the firms that did not have the appropriate arrangements: "These firms either had a plan in place that was unclear, poorly documented or they had no plan."

It said some firms were mistakenly under the impression that T&C compliance was not required as they were not giving advice to retail customers. They were still subject to TC1 - the commitments applicable to all firms - said the regulator.

The FSA reminded brokers that any written plan outlining training needed to be reviewed on a regular basis.

"We did see plans that were reviewed annually that would have benefited from being revisited on a more regular basis," it stated.

Ian Jerrum, managing director of training company Searchlight Solutions, said: "This latest review shows that training and competence is high on the FSA's agenda. There is still evidence that brokers are failing to keep adequate records in addition to falling short on training.

"I also feel that brokers need to realise that they need to focus on soft skills, such as management training, as well as technical ones. They may also need to show the regulator that their managers are competent."

Competence assessment
The FSA recommends:

  • Setting up an ongoing development plan to address staff training needs
  • Keeping evidence of sales file checking
  • Use of key performance indicators to assess an employee's performance against a firm's standards
  • CPD activity, with emphasis on quality rather than quantity
  • Annual 'fit and proper' tests, such as credit checks
  • Regular one-to-one meetings to assess progress and address any issues.