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TRAINING & COMEPTENCE IN A NEWLY REGULATED ENVIRONMENT - PART 2 (T&C News - March 2005)

Each newly regulated insurance firm is required to have a detailed T&C Scheme in place, setting out responsibilities and methodology for all aspects of training and competence. Specifically on the training side, this should cover: how, and by whom, training needs are identified; how objectives, timescales, responsibilities and measurements are set; who is responsible for ensuring training is timely, appropriate and properly evaluated; who carries out this evaluation - and, finally, how the firm ensures that training remains effective and up to date.

Among the issues already flagged up by the FSA as potential problem areas in relation to training within the general insurance sector is a tendency for firms to assess the vast majority of new recruits as competent. This pattern is attributed by the FSA to an excessively lenient attitude and/or to a lack of inclination to invest time and money in training on the part of some firms. Bland assumptions of competence, however, will be coming under increasingly intense scrutiny. Among the requirements of the new regime under TC2 are that firms carry out a thorough assessment for all roles, and that, where an individual is assumed to be competent, the firm is able to produce evidence for this assumption. Just because someone has performed a role for 10 years does not necessarily mean they are fully competent.

The FSA has also voiced concerns about training not being delivered on a consistent and coordinated basis. Where training is piecemeal, inconsistent or inadequately documented, the FSA will clearly have serious concerns. The fundamental consideration has to be that the training delivered is specifically targeted to the needs of the individuals concerned, as determined at the knowledge and skills assessment stage. It is also vital that all training delivered accurately reflects changes in the market, available products, legislation and regulation.

On the subject of examinations and general industry qualifications, the FSA is more concerned with seeing individuals specifically equipped with the skills and knowledge they require in their daily roles than in their having passed generic insurance industry examinations. Initials after an individual's name are seen as no substitute for current role-specific training, although, where appropriate for the role, qualifications may be considered as one aspect of the attainment of competence.

In its consultation with the insurance industry prior to stepping in as the new regulator the FSA had frequent recourse to the phrase 'it is mostly common sense.' As reasonable and accommodating as this may sound, common sense means different things to different people. Any insurance provider - and perhaps we would be talking primarily about some of the smaller brokers in the market - whose understanding of common sense equates to not worrying about things that will probably take care of themselves is in for a rude awakening.

With training, as elsewhere, the burden of proof lies very much with the regulated companies. Firms will be required not simply to be compliant - but to demonstrate that compliance. Where insurance broking firms work with established and reputable external training providers, they may find that much of the work in terms of identifying knowledge and skills gaps, documenting progress attained and continuing assessment is done for them. External providers can assist greatly in putting together an appropriate and consistent training plan and document of outcomes for broking organisations. It should always be remembered, however, that responsibility remains with the firm's management and can never be delegated to any outside agency.

Save perhaps in the actual process of reporting, the FSA's stipulations on T&C impose no greater burden on insurance providers than any firm truly committed to operating successfully and professionally in today's market would undertake as a matter of course. This is wh

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