Question: I understand that some employers are requiring their staff to pass certain exams. Do the FSA rules require this, if not, are the rules likely to change in future?

ANSWER: Following full consultation with the industry and other interested parties, the FSA decided not to impose a mandatory examination requirement in respect of insurance activities.

All firms authorised by the FSA must comply with the 'commitments'. This is the guidance in the FSA's training and competence sourcebook and states a firm's commitments to training and competence.

The FSA recognises that it is important in an advised sale to a retail customer that the adviser is competent to undertake his role to help ensure that the customer is recommended an insurance contract that is suitable to meet the customer's needs.

So for advised sales to retail customers, the FSA has decided to go beyond the 'commitments' and to apply the full training and competence sourcebook (but without the mandatory examination requirement). This will require firms to comply with rules covering recruitment, training and record-keeping.

As the rules impact upon firms, it will be up to firms themselves to ascertain the competencies required to perform job roles. Some employers may well look at examinations as being a valuable source of evidence of employees' acquisition of knowledge and of their understanding having been assessed objectively. However, examinations in isolation are unlikely to suffice.

The FSA is unable to change fundamentally its rules without a period of reconsultation. If it were to reconsult, the industry would have the opportunity to make its voice heard and to influence the FSA's decision making. The FSA would be unlikely to propose mandatory examinations if the industry makes the current training and competence regime work.

  • Steve White is regulation and compliance manager at Biba