February 2007

CP 07/4: Training and Competence Sourcebook review

This CP, published on 28 February 2007, seeks views on proposals for a much shorter T&C Sourcebook, to apply only to retail firms and business. The current "commitments" in TC1 will be replaced by a new overarching competence rule in SYSC (this will apply to all firms). The new sourcebook itself, for retail business, will have fewer rules and "a modest amount of more focused guidance". The exam requirements for specified retail activities are to be retained (together with the existing "safe harbour" for firms using exams taken from the FSSC's list of "appropriate examinations").

The new competence rule in SYSC will in effect extend to all firms the competence requirement that has already been introduced into SYSC for "common platform" firms, consequent on MiFID. This requires firms to employ personnel with the skills. knowledge and expertise necessary for the discharge of responsibilities allocated to them (the "competent employees rule"). It is recognised that wholesale firms, although no longer subject to a compulsory exam requirement, may wish to continue to require staff to take exams as part of demonstrating competence, and the new SYSC provisions will indicate that the FSA will take such arrangements into account in assessing compliance with the "knowledge" component of the competent employees rule. This is a reminder that the streamlining of the T&C sourcebook does not imply any reduction in overall standards of competence: it is about giving firms greater flexibility over how to demonstrate compliance - in line with a more Principles-based approach.

The consultation period runs to 23 May. Subject to the outcome of the consultation it is proposed to make the new rules to take effect from 1 November.

The CP is supported by a separate assessment of the costs and benefits of the current retail exam requirements.