Certification
The Senior Management & Certification Regime (SM&CR) came into effect for smaller financial services firms in December 2019 and should now be fully embedded into each company’s systems and controls.
As part of the regime, it’s the responsibility of the firm to certify that each financial adviser is competent to fulfil their role annually. Each individual should then be provided with a signed certificate.
In order to demonstrate that you have fully assessed the competence of each individual, we would recommend that the following areas are reviewed:
Honesty, integrity and reputation
It is important to assess whether each individual meets the relevant criteria for honesty, integrity and reputation.
Areas to review could include:
· Have full references been obtained?
· Has the individual undergone any criminal or civil proceedings?
· Have there been any regulatory breaches?
· Has the individual undergone any disciplinary issues either at work or through a professional body?
It may be appropriate to ask each individual to complete and sign a form covering off each of these areas.
Financial soundness
Issues relating to an individual’s financial soundness could have an implication on their day-to-day work and the advice being provided. In order to assess each individual, you may wish to complete a credit check.
Alternatively, you may be happy for them to complete a signed declaration.
Qualifications
It is important that each person’s qualifications are reviewed and checked, to ensure they are suitably qualified to act within the relevant role.
Employers should hold on file details of appropriate qualifications and/ or copies of certificates.
Training and Development
All individuals should complete ongoing training to ensure that they retain the knowledge and competence required to complete their role. This should cover a full range of areas and should be targeted based on the individual’s personal training needs.
All financial advisers should complete a minimum of 35 hours CPD each year, of which at least 21 hours should be structured CPD.
The firm should ensure that the following are in place each year:
· Up to date Statement of Professional Standing
· Record of satisfactory CPD completed
· Satisfactory training and development plan
Technical knowledge
It is important to assess whether each individual continues to have the technical knowledge required to complete the role. As well as holding appropriate qualifications, their training and development should be appropriate to enable them to retain their knowledge and keep up to date with any regulatory changes.
In addition, we would suggest completing a knowledge test on an annual basis. This should cover the relevant areas and products that each financial planner provides advice on. Any areas where a training need is identified following the knowledge test should be incorporated into the training and development plan and additional support provided.
Skills and expertise
It is important to assess not only each individual’s technical skills, but their soft skills and of course the suitability of the advice provided for each individual’s specific circumstances. The following actions can be used to help formulate an assessment in these areas:
· Client satisfaction levels (may be assessed through surveys, reviews and complaints.
· Key performance indicators — including levels of persistency, business range
· Internal and external file checks
Role Specific Requirements
Certain products and areas have specific ongoing requirements e.g. Pension Transfers. Any planners that provide advice in these areas should ensure that any additional requirements are met.
