How to Design Your T&C Proposition for the Post RDR World

2. How to Design Your T&C Proposition for the Post RDR World • John Williams Principal, Skillfit Solutions

3. How to Design Your T&C Proposition for the Post RDR World • Why Have a T&C Scheme • RDR – T&C Impact • T&C for the Post RDR World • Competence • CPD • New Beginners • Questions

4. Why Have a T&C Scheme? Regulatory compliance Commercial benefit

5. Why Have a T&C Scheme? • Regulatory • compliance: • Risk mitigation • Customer fairness • Minimum standards • One size fits all • Commercial • benefit: • Customer experience and value • Business model • Competitive advantage

6. RDR – T&C Impact • Competence • Focus on ‘competence’ and who is responsible • Training is just one of the solutions Professionalism • Appropriate Qualification • Level 4 • CPD • Explicit and formal requirement • Independent Verification • Role of Accredited Body • SPS • APER compliance

7. RDR – T&C Impact • Competence Measurements • Qualification time limit • CPD – hours and type Data Capture and Reporting • Professional Standards data • Quarterly reporting Notifications • Significant events • Competence and supervision failings • APER compliance failure

8. RDR – T&C Impact • Is This Good Enough for the Post RDR World? • Entry level standard • One size fits all • Monitoring to avoid failure Questions for you • Firms’ responsibilities? • Business and advice model? • Professionalism? • Will this be right for your customers?

9. RDR – T&C Impact • “Firms should ensure that their systems • and controls, including competence of employees, keep pace with any changes in their strategy and business model and with any new services the firm is offering” • FSA’s Retail Conduct Risk Outlook 2012

10. T&C for the Post RDR World • Commercial Benefit • Customer experience and value • Business model • Competitive advantage

11. T&C for the Post RDR World • Commercial Benefit • Customer experience and value • Business model • Competitive advantage …. Delivered through the Quality of Your People!

12. T&C for the Post RDR World • Competence • Defined as: • Knowledge ~ Skills ~ Expertise ~ Ethics

13. T&C for the Post RDR World • Competence • Defined as: • Knowledge ~ Skills ~ Expertise ~ Ethics • In the context of YOUR: • Business model • Services offered • Customers • Reputation

14. T&C for the Post RDR World Define Standards • Competence

15. T&C for the Post RDR World • Competence • Core • Firm Specific • Application • Qualification

16. T&C for the Post RDR World • Competence • Core • Firm Specific • Application • Qualification • Advice Process • Information Management • Technology

17. T&C for the Post RDR World • Competence • Core • Firm Specific • Application • Qualification • Advice Process • Information Management • Technology • Fairness • Conduct • Customer Experience

18. T&C for the Post RDR World • Competence • Assessment – Robust, Meaningful and Current • Evidence • Confidence • Supervisors • Development required? • Critical skills – observation / coaching / feedback • KPI Framework • Business model changes • New risks • Data or Information?

19. T&C for the Post RDR World • Competence – Resources • On-line competence systems • National Occupational Standards – Financial Planning • PFS – Pathways guides • FSA Resources for SME firms – fact sheets, guides,case studies, good practice, etc. • Financial Skills Partnership – T&C Guidance

20. T&C for the Post RDR World • CPD • Some Questions Who decides? What to use? Maintenance or Development? Where to get it from? How much is enough? What evidence should I keep?

21. T&C for the Post RDR World • CPD • Who decides? • Individual – APER • Firm – SYSC competent employees rule • Accredited Body – independent verification

22. T&C for the Post RDR World • CPD – How to Decide • Gap-fill is the way forward! • Current competence standards • Current performance record • Self-appraisal • Performance review • Performance evidence e.g. KPIs, test results, customer feedback etc. • Performance development • Development plan – ideally quarterly cycle

23. T&C for the Post RDR World • CPD for Professionals • Select carefully – there is plenty of choice! • It has to be relevant to qualify – but all CPD doesn’t have to qualify! • Complete the development process • Maintain the evidence you need • Work closely with your Accredited Body

24. T&C for the Post RDR World • T&C for Beginners • Trainee financial advisers: • Recruitment • Training

25. T&C for the Post RDR World • T&C for Beginners – Trainees

26. T&C for the Post RDR World • T&C for Beginners – Trainees • Factors which make this more difficult: • New standards • Longer lead-in time • Higher costs • Smaller talent pools • Increased risk

27. T&C for the Post RDR World • T&C for Beginners – Trainees • Career structures • New adviser programmes e.g. Financial Adviser School • Graduate programmes • Financial services degrees • Graduate Foundation College • Internships • Resources • PFS Pathways • Directions website

28. T&C for the Post RDR World • “....where our judgement is that a particular aspect of a firm’s business model – its product selection, its remuneration practices, its training or recruitment for instance – is likely to give rise to poor customer outcomes. We won’t wait to see if those outcomes occur.” • Tracy McDermott, Director of Enforcement and Financial Crime, FSA

29. T&C for the Post RDR World • Any Questions?