At first sight, it looks as though general insurance intermediaries are getting off lightly with the FSA not requiring that they sit an examination. But their firms will still have to demonstrate they are competent for their role and I think that we can safely assume that many firms will be requiring their staff to go through suitable exams. Firms may well consider that they will only be able to satisfy the regulator that they are observing these high level requirements if they can show that their staff have the right qualifications.
However, I am pleased that the FSA is not introducing a prescriptive requirement as its present approach will allow more flexibility and gives firms the chance to say that they have met the high level requirements by their own preferred route, rather than by someone else’s preferred route.
This ought to be the way in which regulation is conducted – unless there is a very good reason for going into greater detail.
Personal Touch Insurance
As a distributor of these products, and responsible for training and competence (T&C) for members of our network, it will be up to us to prove to the regulator that our agents are fully competent at outset and then for us to provide ongoing professional development.
Clearly consistency of approach would make this easier, however it may not be providers alone who can fulfil this function, as some may not have the required knowledge themselves – especially those used to operating in broker based environments as opposed to having their own sales forces. Their role may be confined to examining our procedures to ensure we are meeting a basic standard of competence in order to protect their brand image.
Providers with their own distribution forces will be best equipped to support us in proving levels of competence, as they have been doing this for a number of years via their own direct sales distribution channels.
Premier Mortgage Management
When I look at such issues, I cannot help but consider the whole purpose of regulation and that is simply consumer protection. Anything that obstructs this, whether it be lack of transparency, dangerously confusing lines of advice or the lack of the advisers experience or provable experience via specialised qualifications, has to be considered as contrary to the ethos of regulation.
The FSA has already made it clear that there are certain products that are high risk and therefore should consider the precedent they have set in the proposed changes in CP174 and CP186.
The industry does not mind such regulation provided it is cost effective and that there is a level playing field. The clear danger with the lack of mandatory T&C regimes is that they are open to error or blatant abuse. As a company PMM will adopt the FSA’s investment T&C requirements for its mortgage activity to ensure a standard of the highest calibre.
Select & Protect
Although CP187 requires no specific examinations to be taken by those advising retail customers, it does require that they must meet the FSA’s full T&C requirements. These requirements include rules on recruitment, training, attaining and maintaining competence and record keeping.
A wise provider will set internal exams and close monitoring procedures to ensure their staff reach the required level. The requirements are only slightly more rigorous than those suggested by the outgoing GISC.
Much of the difficulty will come down to the complexity of products being offered by a provider ‘ the more choice, the more training and competence will be required. This makes the idea of a panel of insurers for a product line less appealing. For those planning to go down the appointed representative route for general insurance, the choice of provider goes far beyond who offers the best commission, but who offers the best training, monitoring and product range. In an ideal world providers would work together to ensure consistency, but when insurers cannot even properly share claim data, this becoming a reality is doubtful.
Legal & General
The application of the T&C scheme will be the responsibility of the agents themselves where they are directly authorised by the FSA. For those firms who become appointed representatives, their hosts (who could be other agents, networks, lenders or providers) will have to ensure that the advisers are competent.
There is a whole range of tools to do this, examination being one of these.
At this stage it is not clear whether an examination would be the most appropriate means of assessing competence.
I think it is unlikely that, given the diverse nature of the potential users of any such examination, they will get together to create one, but they may use a centrally produced exam such as a critical illness module if one becomes available.
At the moment the focus needs to be on creating proportionate relevant supervision of advisers and using the tools that best deliver this.