Are you ready?

Statutory regulation of insurance selling and administration by the Financial Services Authority (FSA) is scheduled to begin in 2005. The proposed approach set out in CP160 seeks to achieve a balance between consumer risk and regulatory requirements. The types of contract identified by the FSA as higher risk will have implications for those who offer long term care insurance, critical illness cover, private medical insurance and income protection. In these cases, the FSA is likely to consider more stringent requirements for advice and documentation and possibly compulsory qualifications.

Many people have been struck by the parallels that CP160 has with other FSA consultations, specifically those for investment and mortgage advice. The new rules will hopefully ensure appropriate risk-based regulatory requirements will be available to financial services customers in all areas and those regulated will be able to avoid the problems of compliance inevitably found when there are a number of varying regimes.

As with existing regulation of investment and mortgage advice, and General Insurance Standards Council (GISC) requirements, the benefits of training and competence schemes are recognised by the FSA. Planning and developing training and education systems early enough is essential to ensure companies satisfy the new training and competence regime for individuals selling and managing insurance contracts, now less than two years away.

Competence and knowledge

The insurance sector will need to take an increasing interest in qualifications and training as a result of regulation.

The right type of qualifications can help meet regulatory requirements for training and competence by providing evidence of independent assessment of knowledge and understanding, which can be combined with assessment of competence in the workplace ' a key theme of regulation.

Qualifications are also evidence of commitment and achievement by individuals, which is a key consideration in a market where everyone can expect greater job mobility and the need for flexibility.

There is no doubt the correct approach to planning personal development will become increasingly important as regulation develops in the general insurance sector. The current regulatory initiatives show the importance of being able to demonstrate competence, and should be considered by anyone involved in career planning, on a personal or professional level.

Although compulsory levels of qualification are not being stipulated at this stage, the outlook for future regulation clearly encourages employers and individuals to give careful thought to personal development and skills issues. Regulation applied to the distribution of general insurance products is l ikely to increase the need ' for everyone working in direct contact with the public to show evidence of competence.

The proposed approach set out in CP160 seeks to achieve a balance between consumer risk and regulatory requirements. The FSA is seeking views on requirements that will affect the way advice is given and consultation provided, all of which have implications on the need for people to show they are competent. Qualifications at the right level can demonstrate this knowledge and understanding.

During 2003 and 2004, there will be an unprecedented amount of regulation affecting insurance business and the day-to-day management of any financial services organisation.

Preparing for the future

Regulation will impact on all levels of staff and business and the processes associated with sales and servicing of products. In planning for the future it will be important to ensure the choice of course or qualification takes into account business, personal and regulatory needs.

It is clear two main areas will get particular attention: distribution and management. In both cases employers and individuals will need to plan ahead. Having the right portfolio of qualifications and skills will be essential. Selecting an appropriate level of course or qualification will be a key consideration. However, it must be noted that details of appropriate qualifications have yet to be confirmed by the FSA.

In many cases formal qualifications will provide a goal for individuals. When deciding which route you might follow you need to consider what options exist both in terms of the content of qualifications and the way they can be studied.

When people enroll on a course leading to a professional or academic qualification, they often do so with a sense of dread ' a fear of the unknown. Before you commit to a course of study, at whatever level, check out your options.

For most qualification routes there are a number of courses available. Ensure you choose the one that best suits you and best matches your needs as a student. For example, do you need to attend classes with a lecturer or trainer in order to learn most effectively, or are you more comfortable studying by yourself, with a tutor available just an email or a phone call away should you need one? Or would a combination of the two be the most effective method?

Whether you enroll for evening or weekend classes at college, or opt for the increasingly popular ' distance learning ' you will find your trainer or tutor will devote a lot of time and energy easing you into your course. They will also be sympathetic to the fact that it may have been several years since you last undertook serious study, understand you are trying to fit your studies into a full life and generally give you the support you need to become a student again.

Increasingly, busy professionals are opting for distance learning courses. For example, over 60% of Institute of Financial Services (ifs) students on degree or diploma programmes now opt for this method of study, and this percentage is increasing every year. Working to a detailed week-by-week study plan, with the constant support of a tutor, with all the hard work done by you when you choose to in the comfort of your home has been found by many people to be an effective way to study. And the results speak for themselves. Distance learning students regularly and consistently achieve better results than those studying on more traditional 'face-to-face' courses.

Modern self-study materials are a different breed to the old 'teach yourself' books. These materials engage you as a learner and offer you a range of experiential learning activities, which enable you to develop a real understanding of the subject matter way beyond simply memorising and regurgitating facts and figures. Moreover, many modern self-study materials are available through a variety of media, including online or CD-ROM formats, which facilitate an even more engaging, interactive learning experience.

Weigh up the options

Examinations have also changed. At many levels of qualifications either part or all of the assessment process can involve multiple choice testing which has become increasingly sophisticated. Such tests can be taken either in a paper-based form or on computer.

Whichever route you decide to follow, either as an individual or employer, always take time to consider your options and what you both need and wish to achieve.

When considering qualifications, which address the needs associated with distribution of general insurance, there are some relevant courses already developed. In the early days of self-regulation by the General Insurance Standards Council, the ifs, for example, developed ways to help organisations and individuals who needed access to an independent process for assessing knowledge and understanding, which takes place in the workplace.

The need to be able to assess required knowledge and understanding as part of training and competence for staff in time for this new regime can be met by the Certificate in Regulated General Insurance (CeRGI), a qualification that provides an introduction to the basic principles and practice of both commercial and general insurance. CeRGI can therefore be a useful component alongside workplace assessment of competence in systems designed to meet regulatory training and competence requirements before the new regime begins.

Timothy Fox is head of marketing at the Institute of Financial Services

l For more information on CP160, turn to Think Tank on page 19.