The results of a recent themed inspection of compliance with certain aspects of the Minimum Competency Requirements (the “Requirements”) in a number of credit institutions should provide a useful guide to insurers in determining their own compliance with the Requirements.

On 1 December 2009 the Financial Regulator published the results of a themed inspection that focussed on the grandfathering provisions and the register maintenance provisions of the Requirements.  With the exception of two institutions, the results were deemed unsatisfactory. 

The Requirements, which came into effect on 1 January 2007, apply to all regulated financial service providers (including insurers) and establish minimum standards for financial service providers, who are required to ensure that individuals who provide advice on or sell retail financial products, or who undertake certain specified activities on their behalf, possess the minimum competencies set out in the Requirements. In addition, individuals are required to undertake a programme of Continuing Professional Development (CPD) on an ongoing basis. 

The Financial Regulator identified the following as issues that arose during its inspection: 

• Each firm’s procedures must ensure that individuals are certified as being eligible to be grandfathered by the firm, and not by the individual themselves;
• Firms must ensure that the criteria for the assessment of grandfathered individuals is clearly documented;
• Firms must ensure that they have certified compliance with the experience criteria of the Requirements in respect of each grandfathered individual; 
• Firms must ensure that they can determine that each grandfathered individual has firstly completed the required number of hours of CPD, and secondly that each hour is relevant to that individual’s activities.  The responsibility to ensure compliance with the Requirements rests with the firm at all times; 
• The purpose of the register is to inform the consumer that individuals providing any of the services set out in the Requirements possess an appropriate level of knowledge and expertise.  A consumer seeking advice in relation to an insurance product, for example, should be able to determine from the register that the individual providing the advice holds a recognised qualification or is grandfathered for that category of product.