Last week, we set a compliance test aimed at supervisors. Here, Petrina Oxshott provides the answers and some explanations

Here are the suggested answers and remember that some questions may have more than one answer.

Question 1An individual practitioner is expected to carry out his/her duties to a standard of reasonable competence.Competence is knowledge and understanding of how to do something and having the skills to apply them.So in simple terms, reasonable competence might be said to be doing something in a manner that the majority of peer practitioners would do in the same situation. There is no definition prescribed by any regulator but the RW Associates definition is as follows:"A robust competence benchmark is that point at which a practitioner can undertake a task to a standard that would be expected by a majority of peer practitioners, unaided and without constant supervision, where the risk to the customer/firm is reduced to that which cannot reasonably be foreseen."

Question 2Direct Supervision is the term used to describe the level of supervision when a practitioner is undertaking a task for which they are not competent.

Question 3Continuing supervision is the term used to describe the supervision of someone who is deemed competent.

Question 4Monitoring is the term used to describe the process of measuring and checking whether a firm and its individuals are meeting laid down benchmarks and if they do not, measuring whether remedial actions are being carried out and having the desired effect of meeting benchmarks, normally within a specified time.Supervision is the term used to describe the task of working with one or more persons, assisting them to work in a compliant and competent manner, and where competence and compliance is not going to or is not being achieved, to be competent to take the appropriate steps.

Question 5If the benchmarks have been set correctly, then you have to accept that a poor result in the knowledge assessment leaves the customer (and probably the firm) at greater risk than is acceptable. Empirically, the individual should, therefore, be put under direct supervision until the standard of knowledge meets an acceptable benchmark.In reality of course there will be degrees of risk and you might introduce a rule that if someone falls below a knowledge benchmark, they will be given a week to learn that which they did not know and be allowed a reassessment at the end of that period. (Beware. Do not allow the assessment to drag on).On the other hand, if the practitioner concerned did not seem to know much about the effect of a warranty, perhaps they ought to be under direct supervision anyway!

Question 6Knowing and understanding something and being able to apply the knowledge and understanding to a reasonable standard laid down by a governing, regulatory or representative body and good market practice as supported by the majority of peer practitioners.

Question 7No. The key skills of a supervisor's job description are not the same as those job descriptions of the roles he/she supervises.However, the authorised firm could have a problem if the supervisor were not competent to do the job supervised as he/she could not then stand in for someone who was absent or deemed not competent.

Question 8a, b, c

Question 9All are valid.

Question 10a, b, c

Question 11c

Question 12aa, b, d

Question 12bcPerhaps the more correct answer is that you should follow your firm's laid down procedures, but the key to this situation is that you must document what has happened and your concerns before you start trying to solve the problem.

Question 13cHarsh, but this scenario puts the customers at risk (and indeed the firm). This person is not competent and should not be allowed to continue working without direct supervision and frankly, this seems to present the classic ingredients for substantial retraining and reassessment.

Question 14a) You cannot supervise what you do not know.b) The firm's procedures manualc) Remember the adage "if it is not written down it did not happen". Your first question must be whether the diarised meetings actually occurred?d) This will impress no one in the future. Contemporaneous written records are the universally accepted standard of professional practice.

Question 15The FSA's stance is that it wishes to avoid being too prescriptive about how a firm achieves compliance and often it will be a matter between the employee and the authorised firm when that employee fails or refuses to follow laid down procedures.What the FSA is interested in is whether the authorised firm has assessed the risk of this situation and how it impinges on the FSA's four statutory objectives. We only have to consider the first of these to get our answer.Is it a risk to the public that the authorised firm has no idea of the movements of an employee and monitors none of his work and advice?Of course the answer is in the affirmative, and with correct supervision and monitoring, the risk could be reduced substantially.Remember that 30 years without a negligence claim or complaint is exactly what the FSA wants, but it is the next 30 years, not the last 30 years that the regulator is most concerned with.

Question 16Examinations are benchmarks of achievement not benchmarks of competence to do a specific job. Certain underpinning knowledge in an exam might be a critical part of competence, but it depends on the job and whether the examiner asks the right questions.

Question 171) Purely commercial, but if you select courses relevant to the job it costs about £80 for a course book and perhaps the same again to undertake an exam or knowledge assessment. One thing you can be sure of with a quality course is that the generic material in it is good underpinning knowledge for the job.Unless your firm has an in-house training department, how is a firm going to find time to impart that level of knowledge internally?2) They are an achievement and as the examination bodies adapt to changes in thinking about methods of assessment, so 'certification of achievement' becomes more accessible.The only certificate of competence that means anything is the one granted on your retirement day, which states that you have never let a customer down and caused them financial loss or unwarranted grief. Certificates of achievement tell us much more about the qualities and commitment of an individual.3) Professional discipline is critical to the process of risk management and professional assessments require commitment and discipline to get on well.4) Recruitment. Believe it or not, many potential new entrants to the industry are put off because there is no formal and employer-supported career progression linked to certified professional achievement.5) Chartered status. Letters do not mean an awful lot to members of the public, but chartered status is another matter. Both here and internationally, this carries some weight.6) Respect. There is a way to go yet but gone are the days that the only way to become qualified is to sit in a sweaty exam room for hours on end. Examination bodies the world over are beginning to respect the fact that individuals have different ways of learning and that there are methods of assessment which are more user friendly.

Question 18As an industry, we have rarely kept records of on the job learning and coaching.

Question 19There are various ways of dealing with this, but on the basis that you will need to provide continuing service to customers, the only real answer is to have a locum to stand in for you. That locum must be competent to deal with your customers' queries or be sufficiently competent to understand the import of any circumstances arising and be able to refer the matter to someone else (perhaps the insurer) if necessary.

Question 20Systems and controls

  • Petrina Oxshott is a specialist compliance and training consultant
  • This page is edited by RW Associates, specialists in training, compliance and competence. Email, ruy.lopez@brokercompliance.co.uk
  • To download a PDF of this article as it appears in the magazine click here .