Supervision and monitoring are vital to keeping the regulators happy. Kate Foreman outlines the way in which supervision should be structured

Over the last two weeks we have examined the scenario of a non-competent staff member and aspects of spotting the problems and dealing with them.

In doing so, we have referred to the job of supervision and monitoring on a number of occasions. If we are going to operate a system of risk management that is sufficiently robust to satisfy regulators, we also have to consider how we develop systems of supervision and monitoring that are appropriate and specific to the risks our firm might encounter in dealing with the public.

We must consider how we might select a person for the duties involved and how we might assess their competence. A vital point to identify at this stage is that selecting an individual to take on a supervisory role should not be viewed as being a `promotion'.

There are other, much more effective ways of rewarding someone's contribution to the firm and you may well have to consider how you reward an individual for taking on a new job role and the learning challenge involved.

Consider the mistakes made within financial services, where excellent sales people were `promoted' into supervisory positions that they were not suited to, either by nature or training. In one swift movement, this reduced the quality of the sales force (the best sales people were now tied into positions where they could no longer function effectively in sales) and produced supervisors who could not supervise, usually because they lacked the skills and/or the aptitude.

It is vital, therefore, that you identify potential supervisors carefully and early on. Getting it wrong can be a costly error.

There is no specific `supervisor model' but at RWA we use a `hard/soft' model.

This splits the supervisor role into two distinct ranges of Compliance Lozenges©.

The hard lozenges

These will vary from firm to firm and task to task, but generally will follow this pattern:

competence to do the job unsupervised

competence to conduct assessments

knowledge and understanding of:

- the relevant compliance matters

- relevant firm specific procedures

- the firm's training and competence; and

- the firm's record-keeping procedures.

The list might be longer or shorter, but you will get the general idea.

The competency that we need to identify here is in the ability to demonstrate knowledge and understanding of how the firm works as a profitable business within a regulated environment. A good supervisor will understand the good business model that regulation can provide.

The supervisor needs to be able to apply that knowledge in an empirical manner so as to identify the good and bad practices that might be happening within the individual supervisor's jurisdiction - and, last, but not least, he or she must be able to record the results within the laid down procedures.

There can be much debate about what should and should not be included in the `hard' supervisor lozenges.

Is it ideal in your firm that a supervisor is competent to undertake the jobs of the staff that they supervise?

If the answer is `yes', can you think of situations where this may not be possible? How do you supervise the managing director?

Of course, hard skills are only a part of the skill set required by a supervisor. Supervision is also about improvement, filling gaps, improving performance and dealing with all sorts of daily problems. Identifying gaps in some of the soft skill areas could also be vital to the health of the business. Finding those gaps might be relatively easy, but filling them in a manner that benefits firm, employee and customer could be more challenging.

There are many soft skills, but for the purposes of basic competence, consider these:

  • coaching

  • one-to-one training

  • group training

  • giving and receiving feedback

  • assessment

  • conducting role plays

  • writing assessment material

  • constructing training and assessment plans.

    You will see that a great deal of emphasis is attached to the supervisor carrying out training within the workplace. This is better for all concerned, since it will save you time and money and means that remedial training can often be carried out `on the spot' where it is more likely to be effective. It is important to realise that good supervisors need to be trained themselves to carry out the tasks of effective supervision.

    However, there are characteristics that are vital in identifying good supervisors. For example, for an individual to be considered for a supervisory role in a regulated environment, it is important that you assess their ability to keep accurate records as required by the company procedures manual and by the regulator. This is a key factor in regulation and you ignore it at your peril.

    Referring back to the mistakes made within financial services, it is often the case that good sales people are not happy to be burdened with paperwork, which they often regard as useless and time wasting. Good sales people do not necessarily make good supervisors if the ability to keep accurate records is pivotal to the job role.

    Knowledge of how the individual training plan is structured and the ability to identify and address training needs is also vital, as is the ability to assess on the job competence. These are areas where you may need external assistance, but, once you have identified and trained your supervisor, you will have a valuable internal resource that will save you future expense.

    We will consider some of these issues in the coming months and we welcome your views on areas that you would like us to cover. Email us at the usual address.

    This week's exercise
    The exercise for this week is both simple and practical. Create a job specification for a supervisor - what will the supervisor be expected to do on a daily basis?

    - This should include the knowledge required for the job (Products? Supervision? How to train? Remember the lists above)

    - The understanding required (How does this fit into the regulated business?)

    - How the knowledge and understanding must be applied on a daily basis.

    Kate Foreman is a learning specialist at RW Associates

    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.

  • This page is edited by RW Associates, specialists in training, compliance and competence. Email,

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