Changes to the MCR &Tips for Implementation: The Minimum Competency Code 2011 Lisa Knox Enterprise Risk Services 17 November 2011

Transcription

1 Changes to the MCR &Tips for Implementation: The Minimum Competency Code 2011 Lisa Knox Enterprise Risk Services 17 November 2011

2 Overview Background CBI Themed Inspections - Lessons Learned Key Changes Implementation 2 Minimum Competency Code 2011

3 Background Deloitte & Touche

4 Minimum Competency Codes - Timeline April CP 4 January CP 14 July MCR September MCC June CP 45 May Addendum to MCR 4

5 CBI Themed Inspections-Lessons Learned Deloitte & Touche

6 Minimum Competency Themed Inspections- Feedback Banks, Insurance Companies, Intermediaries (Nov 09 Oct 10) Register MCR Register was sometimes out of date/incomplete MCR Register was not always publicly available Grandfathering Lack of records/procedures at recruitment Grandfathering assessment did not contain sufficient details of relevant experience Grandfathered individuals not correctly certified - Some firms relied on a process of selfassessment and allowed individuals to certify themselves, and these self- assessments were not subject to scrutiny/certification by firm Lack of evidence of certification of experience requirement CPD Insufficient records of CPD courses undertaken/hours completed Some firms were not monitoring CPD compliance Some firms relied solely on educational bodies to confirm compliance of individuals with CPD requirements 6 Minimum Competency Code 2011

7 Key Changes Deloitte & Touche

8 Key Changes - Overview Definition of Advice Responsibility for accreditation and CPD Amendments to CPD requirements Grandfathers Additional record-keeping obligations Detailed Supervision Requirements Clarification of activities included Amendments to prescribed Retail Financial Products and Specified Functions (formerly Specified Activities ) Amendments to the lists of required competencies in Appendix 3 Outsourcing Accredited Product Adviser 8 Minimum Competency Code 2011

9 Key Changes Advice Old Definition under MCR: the term advice, in relation to a retail financial product, means a recommendation or opinion provided to a consumer which may lead the consumer to enter into or to become entitled to benefit under, terminate, exercise any right or option under, or take any benefit from one or more retail financial product. New Definition under the Code the provision of advice to a consumer, whether at the consumer s request or at the initiative of the firm, in the course of providing or in relation to the provision of a retail financial product or in carrying out any of the specified functions. Note: 6 exclusions remain unchanged as per the MCR (e.g. the provision of a brochure to a consumer etc.) 9 Minimum Competency Code 2011

10 Key Changes Responsibility for accreditation and CPD Part 1 of the Code specifies standards persons must comply with; and Part 2 of the Code imposes certain obligations on regulated firms. Amendments to CPD requirements 15 formal hours per year from 1 January at least 1 hour on ethics - at least 1 hour relevant to each function carried out - max. 8 formal hours in any one day, no more than 4 hours on one topic Obligation on firm to monitor individual CPD compliance Must have procedures in place to monitor compliance regularly Once within first 9 months of the year and again within 6 weeks pre year end must assess number of hours and relevance of CPD undertaken How will breaches be dealt with? All CPD breaches to be recorded on the individual s file 10

11 Key Changes Grandfathers - What s new in the 2011 Code? More detailed record - keeping for Grandfathers, supporting evidence Documented assessment of experience provided CPD compliant (up to 31 Dec 2012) - Certification & supporting documentation that person meets the experience requirement - Confirmation from previous employer of person s experience, - Reasons for any delay in carrying out the assessment - Any other relevant documentation - Records must be complete and accurate Statement of Grandfathered Status - By 1 January firms must complete and retain this on file - Prescribed format in the Code (Appendix 5) - Signed by the firm - Statement must be provided to grandfather when they cease employment with the firm or on request 11 Minimum Competency Code 2011

12 Key changes Additional record-keeping obligations New Entrants Date the person commenced the new function Qualification being obtained, details of initial training that was undertaken/part qualification obtained Details of supervision arrangements (supervisor, level of supervision, date supervision commenced) Details of any pro- rata adjustments made; and Any other relevant documentation. CPD Records: Evidence that the firm monitors and maintains records of qualified/ grandfathered persons CPD compliance Records of any breaches of CPD requirements Evidence of any pro-rata adjustments 12 Minimum Competency Code 2011

13 Key changes Additional record-keeping obligations - Register of Accredited Persons Each branch office must have this register Details: name, qualification/ grandfathered status/new entrant/prescribed script function, date recognised qualification was obtained or for new entrants, the date of commencement and qualification being pursued If a person fails to meet CPD requirements must be removed from register but can be restored once they comply with the CPD requirements again 13 Minimum Competency Code 2011

14 Key changes - New Entrants - Obligations on the Firm Regulated Firm must: Inform the New Entrant, before they commence the activity, that they must obtain a relevant recognised qualification within 4 years Agree a plan to this end with the New Entrant Maintain records of exams If an opportunity to sit an exam is missed, document the reasons why Required Supervision Procedures for New Entrants: Supervision requirements (number of new entrants supervised, initial period of full time supervision, sign off procedures, criteria for reduced supervision, frequency of regular meetings, record keeping, etc) Performance assessments (complexity of role, quality of advice given, knowledge and compliance, ethics, complaints, etc) Supervision of tied agents can be by a product producer so long as fully tied Minimum Competency Code

15 Key changes Clarification of activities included: FSPs providing services over the internet must ensure that the process for selection of products and any advice provided are approved and signed off by a qualified/grandfathered person (previously excluded from MCR) Amendments to prescribed Retail Financial Products and competencies Retail Financial Product categories increased from 6-8 Knowledge versus competencies Certificate of Competency: prescribed format; signed by the firm; and on request. 15

16 Key Changes Outsourcing The Code specifically states that where a regulated firm outsources activities the provision of which are subject to the Code, then the regulated firm remains fully responsible Difficulties in meeting the monitoring obligations for CPD compliance and in obtaining up-to-date information and keeping files and registers Accredited Product Adviser (APA) New shorter qualifications Accreditation in one or more of the 8 product categories Available from September 2012 New qualifications may make interdepartmental transfers more difficult 16 Minimum Competency Code 2011

17 Implementation 2008 Deloitte Touche Tohmatsu

18 Deadlines Date Requirement 1 December 2011 The new Code comes into force and replaces MCR 31 December 2012 Grandfathering assessments must complete and experience must be certified 1 January 2013 Firms must complete and retain on file a Statement of Grandfathered Status (Appendix 5) 18 Minimum Competency Code 2011

19 Tips for implementation Compile a catalogue of deliverables to implement the MCC such as: New/updated policies & procedures e.g. revised CPD procedures and revised compliance manual; Training Plan/Communication Plan Monitoring programme IT system changes e.g. database changes; Updated matrix of MCC roles and gap analysis of those on register and performing roles; An assessment of job specs to ensure MCC coverage; Revised outsourcing SLAs; Revised process for assessing MCC impact on new roles. Advise relevant staff that they must document how they believe they have complied with the Standards and other requirements in the Code Minimum Competency Code

20 Questions? 2008 Deloitte Touche Tohmatsu

21 Deloitte Touche Tohmatsu

22 Contacts Contact Deloitte should your organisation require assistance: Colm McDonnell Partner, Enterprise Risk Services Sinead Ovenden Director, Regulatory Compliance Services Lisa Knox Manager, Regulatory Compliance Services

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