Clouds and their ­linings

While experience counts for something, training in a post-RDR environment should not be seen as a regulatory burden, says Julie Pardy

In most professions, there is always talk about the fact that experience counts. For some, this is seen as more important than any qualification or ­accreditation via in-house training programmes in many areas of financial services in the UK.

If we were to listen in to coffee chats among staff in any number of establishments, we would hear quotes such as: “I’ve been doing this job for 20 years, and now that new training manager has said I’ve got to go on a training course to improve my business quality. Me?! With all my years’ experience, and they still think I need training!”

Amusing, we might think, but also worrying at the same time that these conversations go on. They really are a sad reflection of the fact that organisations have not managed to develop a people-centric training strategy that allows individuals to revel in the opportunity given to them of learning more, and that individuals don’t necessarily see the benefit of improving their knowledge and skills.

There is a belief that there is no substitute for ­experience. However, experience alone is just not sufficient in the current financial marketplace.

We could say that any organisation which can achieve a belief and desire within its staff around both the thirst for knowledge and the achievement of professional ­qualifications really has achieved more than most.

But it is not all about the employer as some employees would have us believe. It is much more than that. The question is how do we get individuals to take responsibility for themselves and their learning?

Mortgage Market Review & the RDR

The FSA has certainly taken steps to assist every training team with this dilemma in its recent Mortgage Market and Retail Distribution Reviews (RDR). Both topics have been in the minds of the regulators for a number of years now. The industry has also known for some time that it was the FSA’s intention to require mortgage advisers to hold a formal level 3 mortgage qualification, and for financial advisers to move from a level 3 to a level 4 qualification in order to remain within the industry and advising clients.

While the final rules have been some time in the making – those in respect of mortgage advice are still outstanding – they have finally arrived for the financial adviser community. So what does that mean to the individual? It is a clear message from the regulator that while ‘experience counts’, on its own it is no longer sufficient with qualifications that may have been taken at any point in the last 20 years or so.

Should we have sympathy for those with many years’ experience of the markets and who are now being forced to take on additional qualifications at a time in their lives when they thought they had put study behind them?

Probably – to a degree. But individuals and businesses will need to understand that as other products, services and offerings evolve around them, they will need to keep on reinventing themselves in order to stay in the game.

Existing experienced staff in both the retail mortgage & investment space have been quick to point out that they are very heavily supervised and scrutinised under the training and competence rules applied to them within their workplace. As a result, they regularly have to demonstrate their knowledge and skills in client meetings and simulated scenarios in order to carry on with their role. This is in addition to regular scrutiny of products and regulatory knowledge through annual testing.

All this leaves such people asking themselves what more do they have to do to prove that they know what they need to know, and how can they translate this into appropriate advice for clients? Without the background knowledge about the ­numerous mis-selling scandals, inappropriate products and poor advice scenarios – that previously meant the industry as a whole having to pay redress to consumers in millions of pounds in terms of compensation – it could be fair to assume that individuals within the industry are being given a hard time by the FSA’s ­continued focus in this area.

But if we look at the statistics around FSA fines and prohibitions, we can see why experience is no longer a substitute for enhancing knowledge and skills:

• In 2009-10, the FSA handed out 46 fines totalling £33.6m to financial services in the UK
• Between 2006-09, there were 2,654,195 complaints registered with FSA-authorised firms
• Of those, 421,368 were in respect of General Insurance & Pure Protection plans
• ...and 92,870 were in respect of Life & Pension plans.