Training & Competence in Financial Services; a multi-functional agenda

Having recently undertaken an increased variety of Regulatory Training & Competence mandates on behalf of clients in financial services, the need for a truly multi-functional approach between Learning & Development (L&D) and Compliance has become increasingly necessary. Collaboration between functions has shifted from being a “nice to do” to being mission critical.

Lack of collaboration between both functions on this issue presents huge organisational risk, as well as the risk to consumers and the broader integrity of the financial services system. As the Financial Conduct and Prudential Regulation Authorities continue to set high benchmarks across competency focused regulation such as MiFID II and the SMCR, it is essential a hybrid model between L&D and Compliance is firmly embedded into organisations.

The FCA are equally transparent in the competency benchmarks they set, as well as the fines they will impose for non-compliance and certification failures. In 2017 they imposed financial penalties on firms totalling £229.5m – as of April 2018 the figure sits at c£3.5m. Contrary to common industry perception, these penalties are not exclusively linked to ‘Whale’ type investment bankers and fund managers. The latest significant penalty relates to a retail investment advisor who provided a false learning statement in relation to a CII Diploma in regulated Financial Planning. Such a failing and the subsequent exposure by the FCA highlights the enormous reputational risks associated with financial services brands.

Despite the importance of this, and the risks, there remains a lack of clarity over where accountability rests for ensuring full compliance.  I’ve heard well-argued cases for it resting with Compliance (presented by L&D), but equally well-argued cases for it remaining with L&D (often from Compliance).

Hannah Margetts, who was previously Head of Learning and Development at Kleinwort Benson Private Bank remarks “In order for organisations to raise the conduct standards within financial services it is imperative Compliance and Learning work together.  The introduction of the Senior Managers and Certification Regimes provides a real opportunity to partner the functions ensuring that the expertise of both translates to user friendly and useful processes for the advisers within the organisation.  Both the SM&CR and the Training & Competence regimes cross over both Compliance and HR and therefore cannot run the risk of being seen as tick box exercises to gain competence.  The regimes provide Compliance and HR a hugely valuable opportunity to be aligned across the entire employee lifecycle including recruitment, performance, fitness & propriety, remuneration, life-long learning and ultimately compliance with regulations.” 

Both business functions in question bring different strengths and expertise to developing a robust regulatory Training and Competence framework to the table. Learning and Development leaders are highly experienced in embedding such processes to the cultural consciousness of organisations whilst Compliance professionals are deep technical experts and astute in high level reporting to the relevant authorities. Success in maintaining high levels of Continued Professional Development in financial services appears to hinge on true partnership between both business functions.

Barry Byrne, Partner, Executive Search

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