Certification for IFAs – the challenges

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Certification: the challenges 

Jeremy Smith of B-Compliant, features in Money Marketing today (see here) – as he takes a look at the challenges of the certification regime and highlights the importance of being proactive to avoid mishaps… 

For many people the Senior Managers Regime is a dim and distant memory, with Statements of Responsibility and new designations to be understood. Whilst not strictly true, the ongoing maintenance of SMR is perceived as far less arduous than the Certification regime.  

Being the 2nd string to the SM&CR bow, the certification regime (with an initial completion  deadline of 9th December 2020, extended to March 2021 due to Covid-19)did appear to some firms to be a task that could be left until nearer the deadline 

However, the requirement to confirm and issue certificates each year so all individuals performing a certificated role within the firm are deemed fit and proper to undertake the role, should not be seen as a simple or quick fix at the last minute once a year.  

Within the FCA handbook FIT 2 provides clear guidance as to the three elements that must be considered and assessed: 

  • Honesty, integrity, and reputation 
  • Competence and capability 
  • Financial soundness 

Of the three elements, it is the assessment of competence which should not be underestimated, whereas the other two assessments are relatively simple to evidence and perform, the assessment of competence can prove challenging to firms large and small.  

Firstly, what exactly should be assessed? Naturally, it should be relevant to the role the individual performs and not just a bog standard list of Key Performance Indicators that all individuals performing the role are measured against, where the achievement is seen as another target rather than a series of steps to continue the development of the individual in their current role.  

Taking CPD as an example, this for many can be how do I achieve the 35 hours I need to comply? Rather than an honest appraisal of gaps in knowledge or application and a chance to proactively seek out suitable solutions. CPD plans really need to reflect an individual’s aspirations as well as the firm’s business objectives.  

Timing  

Using the SPS renewal date as the end point for each annual certification assists in spreading the supervisor workload and stopping one entire month being lost as everyone rushes around to fill in missing gaps in evidence being collated.  

Agreement needs to be reached on what good looks like for the firm and the individual, the activities to be undertaken and ideally a realistic plan to spread these across the year. 

Ongoing activities allow for continual monitoring/assessment, allowing both supervisor and individual to be in an informed position for regular 121 meetings, ideally quarterly and no less than half yearly.  

 Monitoring activities shouldn’t be left until the final quarter of the year, leaving everyone scrabbling around to meet the deadline. It risks leaving perfectly competent people in a position where the renewal of certification isn’t possible.   

Why is this important? From an individual’s point of view, lack of regular engagement and monitoring can leave them feeling unsupported and places them at risk that development requirements are not identified early enough for a plan to be completed prior to re-certification. 

Awkward questions

From the firms point of view, failure to complete appropriate monitoring throughout the year could result in insufficient evidence of individuals abilities and competence for certification. Whilst some may think this is simply ticking a box, as a SMF with overall responsibility would you be keen to agree signing the individual off as competent where monitoring activities have been lackingSMFs may have awkward questions to answer if this was found to be the case and the firm had failed to provide suitable ongoing supervision.  

Referencing  

With regulated references now required in a prescribed format and mandatory when on boarding an individual to a certificated role, deeming someone competent with under par evidence or evidence of under par performance especially in the absence of development plans to evidence the support provided is risky business.  

If an individual loses their job as a result and decides to take it to an employment tribunal it is likely to be a time consuming, costly and embarrassing distraction for all those involved.  

 Clear initial objectives supported by regular supervision activities allow for early identification of potential shortfalls, for development plans to be agree and set in place to provide support and over a period of time improvement or the harsh realisation the individual may not be suitable for the role. It will also allow time for all parties to agree amicable resolutions 

 Continual assessment avoids uncomfortable surprises. Your approach to the Certification regime makes a huge statement about the culture of your firm, whichultimately lies at the heart of FCA compliance.  

Jeremy Smith is a director at B-Compliant, the compliance support consultancy for IFAs. 

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