The Financial Services Authority (FSA) has already stated it wants mortgage advisers to undergo rigorous continuous professional development (CPD) when it takes over regulation in 2004. But, as yet, there has not been any firm guidance on this and many ideas have been muted, from an annual assessment to a top-up qualification. Only one thing is certain and that is, in the regulated world of mortgage advice, CPD will become an increasingly important cornerstone of all mortgage advisers’ training and competence programmes. So those who thought it was all over with the CeMAP and MaQ qualifications will have to think again. This is just the beginning.
IFAs have been used to statutory regulation for some time and the mortgage market has always been seen as a bizarre anomaly ‘ but not for much longer. For that reason, IFAs will probably find the transition to full mortgage regulation easier than traditional mortgage advisers who have never been subjected to the heavy constraints statutory regulation imposes.
As a result, there will probably be a small exodus from the industry when regulation bites, as those advisers who sought refuge in the mortgage industry when it got too heavy for them in the regulated side of the industry decide to quit.
The importance of CPD
So why is CPD important? Well, the principle objectives that underpin all regulation are those of consumer protection and the raising of general standards of advice across the industry. Therefore training and competence requirements are a way of achieving consistent minimum standards of advice. This approach is based on risk and compliance. Monitoring evidence compiled by the Mortgage Code Compliance Board (MCCB) has shown advice and rule breaches occur less often within a well trained and qualified sales force, therefore establishing that minimum standards across the whole industry are crucial to ongoing consumer protection.
The MCCB’s current guidance simply states that member firms must maintain a competence level, leaving the measures and monitoring to the individual member firm. But it is likely this will become more prescriptive under the FSA.
The FSA has already stated its preferred outline for ongoing training and competence which is a direct extension of the risk-based approach the FSA have taken in all of its regulatory proposals.
The FSA wants to ensure the level of training and competence reflects the level of the risk associated with the advice given. It has therefore proposed a full training and competence regime including examination (over and above standard qualification) for all advised sales, with the exception of lower risk mortgages.
However, it also wants a ‘lighter touch’ to the ongoing regulation, training and competence of what it classes as non-advised sales, with the exception of lifetime mortgages which it wants to encompass as part of the advised sale rules.
So what constitutes CPD? In itself, CPD does not constitute a validation of ongoing competence, therefore in most cases there is also a requirement for a regular assessment which must be relevant to the daily work of the individual, enabling them to construct a meaningful CPD programme in preparation for the assessments.
There are a number of recognised forms of CPD such as: attendance at training events (full-time, part-time, external or internal); distance and open learning modules; structured programmes of learning leading to recognised qualifications; structured reading/self-study/assignments; seminars/ conferences/exhibitions; writing papers and articles for publication; professional institute meetings/activities; coaching/tutoring/mentoring/teaching others; making presentations; secondments/special projects; and networking and sharing good practice with industry contacts.
Nevertheless, CPD should be considered obligatory rather than compulsory.
When working out if there is any benefit from CPD it should be noted that, aside from the ability to pass regular assessments, CPD can be of benefit in a number of ways, such as keeping up-to-date with technology and helping improve career opportunities. As such it can lead to greater earning power, increased job performance and satisfaction.
CPD is also of use to employers as it can increase competitiveness through more competent, better trained staff, which leads to improved staff morale and better staff retention.
Before embarking on a CPD programme, employers need to understand that people learn in different ways, so part of any CPD should entail the most appropriate way of learning for different members of staff.
Leading psychologist, Dr Peter Honey, and Alan Mumford, a specialist in management and development, have conducted extensive research and written widely on the subject of learning styles and concluded there are four broad types:
Understanding the different styles can greatly increase the effectiveness of a CPD programme and ensure employees get more out of learning. Therefore, mortgage advisers should spend time analysing staff before setting up a programme.
Activists involve themselves fully and without bias to new experiences, they tend to learn by trial and error and self-discovery and tend to be very active people. These people are likely to throw away the instructions. They enjoy brainstorming and thrive on challenges.
Activists learn best when they can engross themselves in short activities, such as business games, competitive teamwork tasks and role-playing. Or when they have a lot of the limelight, for example, chairing meetings, leading discussions, and making presentations. However, they also enjoy solving problems as part of a team.
Activists learn less well where they are forced to learn in a passive role, by listening to lectures, monologues, reading, or watching. They will not perform at their best if they have precise instructions to follow with little room for flexibility, or they are required to assimilate, analyse and interpret lots of messy data.
Theorists, on the other hand, enjoy traditional classroom situations. They think problems through in a vertical step-by-step way. They tend to be perfectionists. Theorists like to analyse and are keen on basic assumptions, principles and theories models and systems thinking.
They learn best when what is being offered is part of a system, model or concept and they have the chance to question and probe the basic methodology, assumptions or logic behind something, such as question and answer sessions. They will work well if they can listen to or read about ideas and concepts that emphasis logic, or they are required to understand and participate in complex situations. Do not be afraid to let them go off on tangents as they can benefit when offered interesting ideas and concepts even though they may not be relevant.
Theorists learn least where they have to participate in situations emphasising emotions and feelings or where they doubt that the subject matter is methodically sound. So, they will not enjoy being involved in unstructured activities or open-ended problems where ambiguity and uncertainty are high.
Reflectors excel in viewing concrete situations from many different perspectives. They like to collect data both first hand and from others, preferring to think about it from all angles before making a move. They enjoy observing other people in meetings and tend to have a distant, tolerant unruffled air about them.
Reflectors learn best when they are encouraged to watch or think about activities, so they perform well when encouraged to stand back from events and listen and observe. They enjoy carrying out painstaking research, such as investigating and assembling information to solve a problem and preparing carefully considered analyses and reports.
However, reflectors learn least where they are forced into the limelight, or when they are forced into situations which require actions without planning and are given insufficient data on which to base a conclusion.
The last group is pragmatists. They will take most away from searching out new ideas and experimenting. Typically they are the sort of people that come back from management courses brimming with new ideas they want to try out. They like making practical decisions and solving problems. They regard problems as challenges and opportunities.
For this reason pragmatists learn best when they are shown techniques for doing things with obvious practical advantages and when they can concentrate on practical tasks. They will learn a lot when they can see an obvious link between the subject matter and a problem or opportunity they face and have the chance to try out and practice techniques with coaching or feedback from a credible expert.
Conversely pragmatists learn least well when they cannot see the practical benefits and when there is no practice or clear guidelines on ‘how to do it.’
They need experts or role models from whom they can receive feedback or practical advice and they will struggle if there is no apparent benefit from the learning activity.
To make matters more difficult people can be a combination of more than one learning style, but the important thing is to know which type of learning style gets the most from which type of CPD. Understanding this will get the best out of people and implementing it will get the best from the business.
The FSA has stipulated that extra training will be needed for most advised sales.
There are numerous ways of gaining CPD points, but they are supplementary to regular assessments.
Learn how staff work best and tailor learning accordingly.