Your firm might have got to grips with FSA requirements but have your client-facing staff, asks Elizabeth Mills
Most of us are well on the way with our preparations for regulation. Application forms have been completed and managers have started to plan and implement the changes required to ensure full compliance. But don't forget: compliance is not just about ensuring your senior management team understand the implications of regulation. What your front line staff do is just as important. Underpinning the whole objective of compulsory regulation is consumer protection. The people we employ to serve our customers must know, understand and apply the FSA rules regarding selling and administration on a day-to-day basis. How many of your staff, at this point in time, know how to distinguish between a commercial and retail customer (in FSA terms) and, specifically, how to treat a commercial customer who buys a mixed-use policy? If the FSA rules came into effect tomorrow, would your staff be able to conduct a compliant sale? Do they know what information they must give to customers, and when to provide it?
Starting preparationsDo they understand the difference between quoting face-to-face and over the telephone? Are they aware of the cancellation rights that apply and who is entitled to them? As their manager, you may well be able to answer all of these questions, but to be fully prepared, you must start working with your staff now. It is important that they feel comfortable and confident with the changes to their working practices. You may have thought about leaving this until nearer the time - after all, why train them now when they don't need to implement the changes for another few months? There are two issues surrounding this.Firstly, remember that your staff will need time to prepare for the changes. How much time will depend on the individual, their experience and the length of time they have been performing their role. The latter is an important consideration because it is a natural assumption that those who have been doing the role longer will be quicker to take the changes on board. After all, they have the most experience. But sometimes changing the way we do things is harder for those who have been doing it one way for a long period of time, and easier for those who are newer to it. Take this into account. Those of us who have been working with our staff in implementing GISC will have a good idea about the learning styles of our staff and so remember what worked - or didn't - last time. Secondly, the Distance Marketing Directive brings in new legislation from 31 October 2004. This means that, when we conduct any distance marketing activity (provide a quote/conduct a sale over the telephone) we have to comply with certain legislation. So what does this mean?The Financial Services and Markets Act, Insurance Mediation Directive and the Distance Marketing Directive produce legislation that affects our industry. The FSA is given the power to regulate us in accordance with this legislation. The Distance Marketing Directive starts on 31 October 2004 and the FSA has been given delegated authority to regulate us on this legislation from that date. By January 2005 the remaining legislation will come into effect and the FSA will then regulate us for the rest. When quoting/selling over the phone, your staff will need to ensure a certain amount of information is disclosed before the contract is concluded, such as: