Review of the FCA's appropriate qualification exam standards

140 Pages·2016·2.04 MB·English

Financial Conduct Authority
Consultation Paper CP16/24*
Review of the FCA’s appropriate
qualification exam standards
September 2016

Review of the FCA’s appropriate qualification exam standards CP16/24
Contents
Abbreviations used in this paper 3
1 Overview 5
2 Review of the appropriate
qualification exam standards 8
Annexes
1 Cost benefit analysis 12
2 Compatibility statement 13
3 List of questions 14
Appendices
1 Industry working group participants 18
2 Draft Handbook text 23
3 Draft exam standards guidance 24
Financial Conduct Authority September 2016 1
We are asking for comments on this Consultation Paper by 13 December 2016.
You can send them to us using the form on our website at:
www.fca.org.uk/cp16-24-response-form.
Or in writing to:
Steven McWhirter
Governance and Professionalism Policy
Financial Conduct Authority
25 The North Colonnade
Canary Wharf
London E14 5HS
Telephone: [phone]
Email: [email protected]
We have developed the policy in this Consultation Paper in the context of the existing UK and EU
regulatory framework. We will keep the proposals under review to assess whether any amendments
may be required in the event of changes in the UK regulatory framework, including as a result of any
negotiations following the UK’s vote to leave the EU.

We make all responses to formal consultation available for public inspection unless the respondent
requests otherwise. We will not regard a standard confidentiality statement in an email message as a
request for non-disclosure.

Despite this, we may be asked to disclose a confidential response under the Freedom of Information
Act 2000. We may consult you if we receive such a request. Any decision we make not to disclose the
response is reviewable by the Information Commissioner and the Information Rights Tribunal.

All our publications are available to download from www.fca.org.uk. If you would like to receive this
paper in an alternative format, please call 020 706 0790 or email: [email protected]
or write to: Editorial and Digital team, Financial Conduct Authority, 25 The North Colonnade, Canary
Wharf, London E14 5HS
Review of the FCA’s appropriate qualification exam standards CP16/24
Abbreviations used in this paper
AES Appropriate Exam Standards
CP Consultation Paper
FCA Financial Conduct Authority
RDR Retail Distribution Review
SYSC Senior Management Arrangement, Systems and Controls Sourcebook
TC Training and Competence Sourcebook
QCF Qualification and Credit Framework
Financial Conduct Authority September 2016 3

Review of the FCA’s appropriate qualification exam standards CP16/24
1.
Overview
Introduction
1.1 The purpose of this consultation is to update our existing appropriate exam standards (AES)
for appropriate qualifications listed in the Financial Conduct Authority’s (FCA) Training and
Competence (TC) sourcebook1.
1.2 The main aims of our proposals are to:
• amend TC Appendix 4.1.1 of our TC sourcebook to clarify how to read and use the
appropriate qualification tables (see Appendix 2 to the CP)
• update the current AES to ensure that the content continues to reflect the knowledge that
individuals need to perform their roles competently (see Appendix 3 to the CP); and
• seek views on a standalone equity release qualification
Who does this consultation affect?
1.3 This consultation will be of particular interest to those organisations, such as the Accredited
Bodies2, who provide appropriate qualifications to the UK financial services industry. This
consultation may also be of interest to:
• employees and firms required to have appropriate qualifications that are listed in our TC
sourcebook
• prospective firms, employees or students who may be required to have appropriate
qualifications
Is this of interest to consumers?
1.4 Clients, customers or consumers of firms who are required to have appropriate qualifications
may also find this consultation helps them to understand our expectations of appropriate
qualifications.
1 www.handbook.fca.org.uk/handbook/TC/
2 www.handbook.fca.org.uk/handbook/glossary/G2833.html?filter-title=accredited
Financial Conduct Authority September 2016 5
CP16/24 Review of the FCA’s appropriate qualification exam standards
Context
1.5 The FCA training and competence regime helps protect consumers by making sure that staff
working in financial services are appropriately qualified and well regulated. The regime is a
combination of both high level and specific requirements. It includes:
• a high-level competent employees rule in our Senior Management Arrangement, Systems
and Controls sourcebook (SYSC)3 which applies to people working in regulated activity in
all UK authorised firms (including wholesale firms), and
• more detailed requirements which are in addition to the competent employee rule for
certain retail activities, including the need to achieve an appropriate qualification as set out
in our TC sourcebook.
1.6 The TC sourcebook includes appropriate qualification requirements for employees performing
certain activities for retail clients. Under the current TC regime, qualifications play an important
role in providing an objective and independently verified benchmark of the ‘entry level’
knowledge required to undertake specific activities.
1.7 The purpose of this consultation is to keep the FCA’s approach to appropriate qualifications
using AES relevant and current.
Summary of our proposals
1.8 We propose the following changes:
• amending TC Appendix 4.1.1 which clarifies how to read and use the appropriate
qualification tables (see Appendix 2 to the CP), and
• revised AES for the regulated activities which have appropriate qualification requirements in
TC Appendix 1 (see Appendix 3 to this CP)
1.9 The proposed changes update the AES to reflect relevant developments since they were last
reviewed. They do not change our policy on appropriate qualification requirements, introduce
new appropriate qualification requirements or change the level of achievement needed to
meet our rules on appropriate qualifications.
Equality and diversity considerations
1.10 We have considered the equality and diversity issues that these proposals may create. Overall,
we do not consider that the proposals raise concerns about equality and diversity.
1.11 We do not consider that the proposals in this consultation adversely impact any of the groups
with protected characteristics, i.e., age, disability, sex, marriage or civil partnership, pregnancy
and maternity, race, religion and belief, sexual orientation and gender reassignment.
3 www.handbook.fca.org.uk/handbook/SYSC/
6 September 2016 Financial Conduct Authority
Review of the FCA’s appropriate qualification exam standards CP16/24
1.12 Appropriate qualification providers should have arrangements in place to meet their statutory
duties towards equality and diversity. This includes reducing barriers to learning, for example,
providing alternative ways for candidates with a disability or learning difficulty to study and
take assessments.
1.13 We will continue to consider the equality and diversity implications of the proposals during the
consultation period, and will look at them again when we publish our final guidance.
Next steps
1.14 We want to know what you think of our proposals. Please send us your comments by 13
December 2016. Please see page 2 for details about all the different ways you can contact us.
We will consider your feedback and publish our final rules in a Policy Statement.
Financial Conduct Authority September 2016 7
CP16/24 Review of the FCA’s appropriate qualification exam standards
2.
Review of the appropriate qualification exam
standards
Introduction and background
2.1 This chapter explains how we approached the AES review, what we are consulting on and why.
2.2 The TC sourcebook includes a list of appropriate qualifications4 that meet our TC requirements
within the Handbook. The content and level of these appropriate qualifications is prescribed
through AES. Many employees of firms will know about these qualifications because they
have achieved the relevant qualification for various roles, including retail investment adviser,
mortgage adviser, pensions transfer specialist and oversight roles.
2.3 The FCA does not offer appropriate qualifications as these are available through appropriate
qualification providers, but we do set the AES for appropriate qualifications. This helps maintain
a cost-effective, consistent and relevant standard of baseline knowledge for these qualifications.
2.4 When developing these proposals we have benefited from the views of industry working
groups, which the Financial Skills Partnership and Skills for Justice5 have co-ordinated for us.
These groups included representatives from relevant trade associations, professional bodies
and exam providers who are listed in Appendix 1 to this CP. We are grateful to the members
of the working groups for the time and effort they have given to help us with this work and
for their valuable input, which has contributed significantly to our thinking. However, while the
proposals in this paper take careful account of the views of the groups, they do not necessarily
reflect the views of individual group members.
2.5 The main objective of the industry working groups was to:
• contribute to the review of the existing AES and suggest revisions for FCA consultation
based on relevant developments since the exam standards were last reviewed, and
• provide suggestions to help employees, firms and consumers better understand how the
appropriate qualifications tables, and our approach to approving appropriate qualification
submissions, work in practice
2.6 Now that the industry working groups have completed their work, the FCA is publishing for
consultation:
• proposed guidance which clarifies how the appropriate qualification tables in TC Appendix
4.1.1 should be interpreted (see Appendix 2 to the CP), and
4 www.handbook.fca.org.uk/handbook/TC/App/4/1.html
5 www.financialskillspartnership.org.uk/
8 September 2016 Financial Conduct Authority