The FSA consultation paper has arrived and it needs careful study. Waltham Pitglow advises that stakeholders in your firm and others in the distrribution chain must be considered

Well, Christmas time is upon us and. as promised, the FSA has presented us with a fair bit of seasonal reading in the form of CP159 and CP160 which you can now download from the FSA website.

An interesting point about last week's CPD page was the suggestion from CII director general Sandy Scott that, in the world of modern regulation, CPD itself might be thought of more as continuing maintenance of competence (and learning). And frankly, I take the view that this is the sort of constructive suggestion that is good for the industry.

If Sandy Scott is right, then it is almost a matter of fact that any practitioner giving advice or giving support to those giving advice should seek to read and understand this document which is actually rather well written and clear. Full marks to the FSA. Or is it?

Personal affair

For one week only - and until the leading thinkers in the industry can have a chance to consider the suggestion - let us call this the CDC and L page and look at the consultation paper in that light.

CPD by its very definition is a personal affair but, to my mind, the concept of CDC and L brings another dimension to the job in hand. And that is to view the development of competence as something that involves others around us: the personal stakeholders in the job that we do.

What I want you to do is, having obtained a copy of the consultation paper to study it and to consider, having read all of it or just a section, whether you understand what is being proposed in relation to your own job. Then, consider whether you could apply the knowledge and understanding in carrying out that job if the proposals were to become rules. These are the key components of competence.

What you will probably find is that only some of the consultation paper will apply to you. Generally, the more responsibility that you have in an authorised firm, the more the proposals will affect you.

The next stage is to look around you and consider who in your firm is a stakeholder in allowing you to undertake your job responsibilities efficiently and competently.

What should happen is that you will realise that it takes a team to achieve your objectives. For example, if you are an account executive you will find that you rely on the support of a whole range of individuals, from someone who answers the phone when you are out of the office through to the person who collects premiums.

Compliance officer

Then there is the person who deals with claims and the directors of your firm, who should at present be considering a firm specific procedures manual, among other issues.

Or you might be a compliance officer, who has the widest span of stakeholders, from the customer through those servicing a customer's needs and up the scale through the principals of the firm and, ultimately, the shareholders.

However wide the span of stakeholders, which should always include the regulator, you should begin to realise that you cannot really do your job competently on a day-to-day basis unless your own stakeholders also know about, understand and can apply the requirements in their own jobs.

To create a smooth running and compliant firm, it is therefore vital that the relevant aspects of this consultation paper are presented to those that make up what are many thousands of firms (both large and small) within the general insurance industry and to ensure there is feedback from all.

As I write, the leading trade associations are creating résumés and synopses of the 140 pages and no doubt there will be a plethora of analysis available. Much of this will be informed and perhaps much more will be uninformed and designed to encourage you to buy services and advice.

Stakeholder circle

In my opinion, all of this comes to nought if you do not prioritise the need to evaluate how the proposals affect those in your stakeholder circle, and what each person knows and understands about the proposals.

While the FSA is proposing a none too prescriptive regime you cannot survive in your own little box. Each of you will have to break down, or have broken down for you, the parts of the paper that are relevant. Discussion and debate should ensue, even to the extent that you may well find yourself speaking to competitors, so that common standards and practice may be evaluated.

There are many areas of your firm's operation that will have to be considered. Just as an example, have a look at the way you distribute products or services. Whom do you rely on up and down the chain, from insurer to customer?

These could be: other brokers;insurers; agents; garages; professional trade associations; co-insurers; or claims handlers.

Many, if not all of these, will fall under the jurisdiction of the FSA and if not, may no longer exist as authorised firms or individuals from October 2004.

Have they seen the consultation paper? What are they thinking? Are they going to be able to demonstrate competence? Could a well-established distribution chain disappear? Could an authorised firm taking responsibility for others maintain the distribution chain?

And finally, if it is all too much (and for a well-run firm it should not be) should you be talking to others now about the future rather than waiting to the last minute?

The ultimate test of compliance is that the customer can rely on you to perform a specific task, service or duty to a reasonably competent standard.

Applying rules

In a service industry (and a complex one at that) individual competence is only half the answer. Competence must exist from the beginning to the end of the process if the FSA is going to achieve its objective and that can only happen if everyone in the chain (however small a part they have to play) knows, understands and can apply the rules and how those around them have to apply them.

Finally, a thought for the new year. A trend has arisen over the last few years in referring to topics as `high level' and `low level'.

To me this is management speak that denigrates the value of the role of over 500,000 people providing a worthwhile service to the members of the UK public who buy insurance services. I believe that the correct terms are `high level' and `street level'.

Whether it is a household policy or a complex business insurance, it is those that give the advice that hold the key so lets make sure that all those supporting this process are in on the game.

  • Waltham Pitglow is an insurance investigator specilaising in compliance.

    Using this CPD page

    For the vast majority of practitioners and indeed support and supervisory staff in our industry, CPD is about regular learning and study that is planned, recorded, timed and evaluated.

    If you are a member of a professional body with a CPD requirement then there will be certain rules regarding the quality and nature of study material, and the way in which it is recorded.

    For staff of GISC members this means recording on your individual training file what the learning was, who provided it and when.

    It might be structured, such as a course, a learning programme or exam study. But it can be unstructured. This form of study encompasses reading the trade press, technical material or taking part in activities to support your professional body.

    Some CPD requirements are points related (a little antiquated) and others require a time value to be allocated.

    For example, it might take one hour to read Insurance Times each week. Most of that could be put as a time value but, in reality, perhaps only an half hour was devoted to learning something. The rule is to be honest with yourself and record the time that is relevant.

    Always take time to make a note of what you felt you gained from the activity. This is useful information for anyone else considering the same activity.

    In response to the popularity of our CPD programme each week's CPD page can now be downloaded from our website. We will be preparing a binder for you to keep these in alongside the results of the exercises.

    To download a PDF of this article as it appears in the magazine click here

    You will need Adobe Acrobat

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