The publication CP12/8 ‘Changes to the Training and Competence Sourcebook’ proposes to add three qualifications to the ‘appropriate qualifications tables’ in the Training and Competence (TC) sourcebook as well as amending details for three qualifications.
As far as designated investment business is concerned, TC is only applicable to relevant activities carried on for a retail client (the full table of activities can be found in TC App 1.1). Having said that, SYSC 5 (‘Skills, knowledge and expertise’) is applicable to all investment firms regardless of client base.
The basic premise of SYSC 5.1.1 (‘competent employees rule’) is that firms must “employ personnel with the skills, knowledge and expertise necessary for the discharge of the responsibilities allocated to them” (see also the article in this issue on ‘Corporate Governance’). SYSC 5.1.4A informs us that firms that are not subject to TC may wish to take TC into account when complying with the competence requirements in SYSC. In addition SYSC 5.1.5A tells us that where a firm is not subject to TC, but nevertheless requires employees to pass a relevant examination, then the FSA will take that into account when assessing whether the firm has ensured that the employee satisfies the knowledge component of the ‘competent employees rule’.
The changes are relevant to the activities: ‘managing investments’; ‘advising on securities’; ‘advising on, and dealing in, securities’; ‘advising on derivatives’; ‘advising on and dealing with or for clients in derivatives;’ and ‘advising on packaged products’.
The proposed changes to TC can be found in Appendix 1 of CP12/8.
Comments are invited by 31 May which, interestingly, is the same day as the proposed rules are due to come into force according to Appendix 1.