Best Practices in Financial Services Compliance Training

Posted by

Vivek Dodd

on 18 Jan 2021

During the pandemic, 8 in 10 financial services staff worked from home. But the FCA has warned that this is no excuse for compliance standards slipping.

Best Practices in Financial Services Compliance Training

Our YouGov survey found that only 9% of financial services employees foresee themselves working exclusively in the office post-Covid, compared to 57% who expect to work from home at least half of the time. 

While remote working presents benefits, such as saving on the daily commute, it has presented financial firms with new challenges. Like firms in other sectors, financial services firms need to work out how best to engage and motivate staff with training and stay compliant.

1. FCA warns financial services to maintain standards

To focus their minds, the financial services regulator in the UK has stressed that regardless of where staff are based there is no room for a lapse in oversight, and in October 2020, firm were publicly warned to shore up their defences as staff continue to work from home.

“We expect firms to have updated their policies, refreshed their training and put in place rigorous oversight reflecting the new environment...Our expectation is that going forward, office and working from home arrangements should be equivalent – this is not a market for information that we wish to see be arbitraged.”

Julia Hoggett, Director of Market Oversight, FCA

2. Leverage training data to inform and improve

Financial services firms do more compliance training than any other sector. Yet many firms have relied on a broad-brush approach to staff compliance, with off-the-peg, box-ticking training programmes with no attempt to use the data and insights from training in their business.

But significant changes are afoot. The FCA has taken the lead showing the potential of data management and analytical tools. In 2020 it published its strategy on how it plans to use data to throughout every division, change its culture and environment, train all employees to use data effectively, and ultimately transform “how it regulates and reduces the burden on firms”.

As the regulator ups its game, by using data to inform and improve its operations, how long before it expects every regulated firm to do the same to improve their culture of compliance? Let’s look at some of the ways how firms are doing exactly that.

3. Adapt and personalise to make training relevant

The most forward-looking firms are investing in systems and data collection to determine who needs to learn what and track progress as staff complete their training. When training your staff on the financial services conduct rules, the FCA expects:

  • Training is interactive and uses realistic scenarios
  • Examples/scenarios draw out nuances of how the rules apply to each type of role
  • Line managers are involved in training delivery
  • Training is reinforced regularly and built into on-boarding

To meet these expectations, you need to adapt and map training to ensure it is relevant to each role, collect competence and behavioural insights in your management information (MI) reporting and then act on this data, assigning learning content periodically and as roles and responsibilities evolve.

Intelligent Learning

With multiple competing demands, financial professionals are busier than ever. Analyse how much of your employees’ time is taken up by training and whether this impedes their day-to-day work and operations. Review individual and teamwide schedules and consider whether staff need to learn everything you have assigned to them or some elements they can bypass to hone their understanding of other modules. Review modules and levels of staff engagement and use this insight to drive future training modules and delivery.

Be creative and evaluate your approach to determine whether high-engagement techniques such as gamified learning suit your audience and subject matter, or if alternative methods would be more appropriate in that instance. Share granular and collective insights with senior stakeholders to monitor the employees under their watch and play their part in bridging knowledge gaps where they exist.

4. Spend small on training to avoid spending big on fines

Data-driven training will not only steer cost efficiencies for your business, but it could well save you from steep fines should you default on your regulatory expectations. In December 2020, Barclays was fined £26 million for its treatment of customers who had fallen into arrears or were facing financial difficulty, and the regulator cited the firm’s investment in its people as one of its many oversights: “Firms should ensure there is appropriate investment in their staff… including in training and effective management information, to allow firms to monitor customer outcomes and take appropriate action where needed.”

Automate your compliance training schedule with job role and competency maps spanning the breadth of your organisation, then drill down into departments or individual employees to determine their compliance requirements, create training plans and assign learning content. You can also use these to identify and remedy any learning gaps within your workforce.

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5. Training is ongoing, not just a box to tick

Regulation is fast-changing. With the FCA promising to “take stock” of the interventions it instilled in the pandemic’s earliest days, we could well see further developments as 2021 takes shape, no matter what changes lie ahead. However, the FCA is clear that firms must: “…consider changes in the marketplace and products, regulation and legislation.”

Businesses cannot afford to take a tick-box approach to compliance. Ensure your training strategy encapsulates the latest regulatory requirements and then hone your data to ensure that staff fully understand the conduct rules that impact them. Look at their training schedules: do they align with their job role and responsibilities?

The regulator also stipulates that “Firms should also review at regular intervals the quality and effectiveness of such training.” Monitor employees’ understanding as regulation continues to play out, and make sure you’ve got the records you need to evidence this as required.

Gone are the days when a pass mark would sufficiently prove that employees had the knowledge to act compliantly. The Senior Managers and Certification Regime (SM&CR) expects that financial firms certify that personnel can be deemed fit for their jobs on an annual basis at least, and there is a heavy price to pay if employee compliance falls below the mark. As the Training and Competence Handbook states, “A firm must review on a regular and frequent basis employees’ competence and take appropriate action to ensure they remain competent for their role.”

Make the most of the systems and processes you have to ensure your employees understand the rules relevant to their work. Integrate sophisticated assessment analysis within your platforms to cement staff understanding of the subject matter, looking at attainment, attempts to completion and time taken to pass.

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