The retail distribution review has initiated many changes in financial services and one change that has been interesting is the different ways that firms and individuals have interpreted the new rules.
One area that requires interpretation is the application and delivery of continuing professional development. Firms need to create and apply a CPD framework pertinent to their particular business and the individuals that operate within it. However, some of the initial interpretations that we have encountered are some way from reality and I think they qualify as forms of CPD urban myths.
In less than a year, formal CPD schemes become compulsory for retail financial services firms. We have come across a number of myths about CPD in the last few months and have put together a top 10 list to help dispel these myths:
1: Generic learning that is provided to all staff cannot count as CPD for regulated staff as it is not “bespoke” to them.
The test as to whether generic learning is appropriate to an individual’s CPD is as follows: Does the individual need to have the learning in order to undertake their role, that is, is the learning relevant to their role?
If the answer is yes, then the generic learning can count towards CPD. For example, if a big firm is training all its staff on anti-money-laundering procedures, then it would be appropriate for the financial advisers to also undertake this generic training because it is just as relevant to their role as it is to others. Therefore it would count towards their CPD totals for the year.
2: Remedial learning that is put in place after an individual has failed something such as an annual test or field-based observation cannot count towards CPD as it is not “developing” the individual.
Incorrect. Learning that is derived from this type of scenario is most definitely relevant towards an individual’s CPD for the year.
In this scenario, it has been identified that in the course of carrying out their job role, an individual needs to undertake some additional learning. This additional need is directly relevant to and appropriate for the role and so it will count for CPD purposes.
3: Line managers of individuals and supervisors within networks should not develop, deliver and record CPD content because they will be unable to demonstrate that learning needs have been met effectively. CPD should be driven from the central resource hub only, so it can be recorded.
This is a tricky scenario. However, line managers within firms and supervisors operating in networks have a huge depth and breadth of knowledge within financial services, which is invaluable to those they work with.
It is understandable that big firms and network services would want to drive the bulk of their CPD content from the centre but it would be a shame to see experienced individuals not being allowed to contribute to their supervisee’s development.
In this scenario, I would urge firms to provide strict guidelines on how these supervisors/line managers develop and document the ad hoc learning they will invariably give to ensure it is appropriate, effectively delivered and well recorded.
4: Skills-based learning cannot count towards CPD as the RDR requirements revolve around knowledge as opposed to skills.
The FSA’s one-minute guide to CPD clearly states that CPD should cover technical knowledge and its application, skills and expertise and changes in the markets and to products, regulation and legislation. So skills-based learning definitely counts.
5: In order for CPD to count as structured, it must have a test at the end to verify the learning.
No. The FSA’s recently published document on the most frequently asked Q&As from its RDR roadshow, confirms that “Structured CPD does not have to include an examination or a test.”
6: Because accredited bodies ask their members to record CPD in slightly different ways, what is acceptable for CPD to one accredited body will not be acceptable for another.
At this early stage, it is difficult to define what will and will not be acceptable to an accredited body. However, each and every accredited body is working on the basis that each individual must do CPD that is appropriate and relevant to the role they undertake.
As we are talking about a population of individuals that provide “retail investment advice”, then it follows that the accredited bodies will be expecting to see a vast number of similar topics crop up within the CPD logs that will be submitted to them.
The key is to undertake research on which is the best accredited body for you. Contact them and discuss how you will be recording and storing your CPD information and take advice from them during the course of the CPD year if you are unclear as to whether CPD you are about to undertake is appropriate for you and for them.
7: Within a firm, CPD can only be applied to regulated staff.
Incorrect. CPD has now been made a formal requirement by the regulator for those who offer retail investment advice but if a firm or a network wants to apply the principles of CPD to all roles within the organisation, then I believe most would say this is good business practice. The only difference for these individuals will be they will not have to submit these records to an external organisation for review.
8: Development that arises as a result of “observed” activities, such as client meetings and developing suitability reports, cannot count towards CPD activities as they are not managed by the central core of the firm.
Untrue. Activities such as these will crop up on a daily basis as supervisors undertake activities with advisers as defined within their training and competence schemes. The key to ensuring these valuable sources of development for individuals count towards CPD will be in the recording and evidence of what took place and how the need has now been resolved as a result of the activity undertaken.
9: Reading cannot count towards an individual’s structured CPD for the year.
Incorrect. The FSA’s One Minute Guide on the Smaller Firms states: “For a minority of activity, it might also include structured, education reading where quality reading material has been produced to meet the required learning outcome.”
10: Excluding accredited bodies, external providers cannot provide structured and unstructured CPD to firms and individuals.
While the regulator has stated its view of structured and unstructured CPD, it has in no way defined who can and cannot provide CPD services to the industry.
The only restrictions that have been applied to CPD are in respect of the organisations that will operate as accredited bodies.
Firms that are looking to procure CPD services from firms that offer support in this area need to be sure the firm has in-depth knowledge, a strong track record and capability.
It is never too early to start planning. This is a great opportunity for firms and individuals to really benefit from their CPD activity.
- Identify target employees.
- Define what CPD means to you and your organisation.
- Set out what will be included for both structured and unstructured CPD. Remember the guidance that the FSA has set out in this area.
- Consider where you will source the expertise to deliver CPD.
- Consider your business proposition. Ongoing CPD for an independent firm may look somewhat different from a CPD programme for a restricted firm.
- How will you deliver your CPD programme? What technology do you need? Do you have it? If not, can you afford to get it and do you have time to implement it?
- What recording mechanisms do you have? Will your firm use CPD logs provided by accredited bodies or will you provide an internal CPD recording system?
- What will your CPD programme look like? Will it be delivered monthly or quarterly? Who will deliver it and how will you evidence what has been delivered?
- Consider developing a CPD annual schedule whereby newsworthy topics can be timetabled in.
- In order to execute a robust CPD programme, training managers need to work on this now to meet the deadline. The larger the organisation the more complex the solution will be and with this comes time and resource pressures.