View more on these topics

Getting a solid T&C regime in place

This week I&#39m still looking at obligations under the FSA&#39s training and competence sourcebook. You will be relieved to know this is not as daunting in size as the FSA&#39s handbook. The T&C Sourcebook contains just two chapters entitled &#39Commitments&#39 and &#39Detailed rules and guidance&#39.

The first thing is to decide which chapter or chapters apply to you. Chapter one (TC1) will apply to everyone associated with regulated mortgage contracts (i.e.

if you advise on, arrange, enter into or administer regulated mortgage contracts). TC1 also applies if you communicate or approve qualifying credit promotions (FSA speak for marketing activities like cold calling), or if you advise non-retail

customers on non-investment insurance contracts.

Chapter two (TC2) applies if you are engaged in or oversee certain activities. A list of these is contained in TC2.1.4 which can be seen at and is three A4 pages long – too long to list here. However, in simple terms this will concern your back office regulated mortgage activities. TC2 also applies if you advise on lifetime mortgages, design scripted questions for use in lifetime mortgage non-advised sales, oversee non-advised sales of lifetime mortgages or advise retail customers on non-investment insurance contracts.

As discussed last week, your commitment to training and competence is based around five high-level aspirational statements on competence, remaining competent, review of competence, appropriateness of competence and supervision.

To meet your obligations you will need to be clear on how the FSA views competence. It defines competence as: “Being able to show you have the necessary knowledge, skills and experience to do your job and doing it to the required standard effectively and consistently.”

Competence comprises assessment of knowledge, skills and the passing of what are now deemed by the FSA to be &#39appropriate&#39 exams. Your manual must formally document how you will assess knowledge and skills and how you do this will form the mainstay of your T&C regime.

Your manual must cover specific areas and you must think about which areas you will monitor and how you will go about this in the day-to-day running of your firm. For example, (and this not meant as an exhaustive list):

Mortgages sold to those completed

Persistence: How will you measure it? Will you include gazumping within this ratio?

Complaints: Remember, unlike existing MCCB regulation the FSA defines a complaint as any expression of dissatisfaction, whether oral or written, whether justified or not

How will you assess client files? What will constitute a good file and what will be your procedures for addressing a poor file?

Continuous professional development: How many hours will you deem sufficient and what will you deem relevant and applicable?

Knowledge assessments: Will you set an examination? What will be the pass mark?

Re-sitting arrangements?

How will you assess skills? Will client meetings be observed and will you assess role-plays?

Job descriptions for yourself and your employees

Supervision arrangements: What do you have in place for non-competent advisers?

Is your supervision appropriate? How are the training needs of your supervisors identified and addressed?

Record keeping: How and for how long will your records be kept? What actually needs to be kept?

How will you evaluate and identify training needs and who will be responsible for training?

Recruitment procedures: What are they?

You may feel some of these areas are not applicable to you and will not require documenting in your T&C scheme. But a word of caution on recruitment – although you may be a one-man band and are adamant that you will never take on staff, the FSA will still expect you to have formal written recruitment procedures in place, just in case.

The final piece of the jigsaw is to identify an individual who will take responsibility for T&C in your firm to ensure what is contained within this manual is adopted in practice.


Banks should delay Basle compliance, says research

UK banks could make substantial savings by delaying compliance with controversial and costly international regulations set out in the final version of the Basle II Accord, research shows. The FSA is allowing UK banks to choose whether they adopt basic or more advanced levels of compliance to Pillar 1 of the regulations when it is […]

Don&#39t forget that other registration deadline

Brokers who have not yet reregistered with the Mortgage Code Compliance Board may break out in a cold sweat when they are reminded that registration renewal forms received by the board after April 30 will not be accepted. After this date the firm will have to apply for registration as if it were a new […]

A frantic week as repricing grips market

The rough costs to a lender of buying a tranche of money to lend as a fixed rate – known as swap rates – continued to rise last week. • One-year money is unchanged at 4.79%• Two-year money is up 0.03% to 4.99%• Three-year money is up 0.03% to 5.08%• Five-year money is up 0.06% […]

There&#39s a new auditor on the block – the network

I have been watching the exchange between Richard Griffiths (in the red corner) and Neal Smith (in the blue corner) over the past few weeks with growing interest. Call me biased but I think Neal is right. Richard claims that his list was only meant to contain new mortgage networks. Excuse me but second one […]

The curse of long-term cash

Trevor Greetham, Head of Multi Asset at Royal London Asset Management, reveals why clients should be seriously concerned when short-term holdings of cash turn into a long-term investment. There is nothing wrong with holding wealth in the form of cash on a short-term basis. For many people capital stability is important and access to ready cash […]


News and expert analysis straight to your inbox

Sign up