The Minimum Competency Code 2017 and the Minimum Competency Regulations 2017 replace the Minimum Competency Code 2011. The new code has been introduced to incorporate the implementation of the EU Insurance Distribution Directive, the EU Markets in Financial Instruments Directive II (MiFID II) and associated European Securities and Markets Authority guidelines and the European (Consumer Mortgages Credit Agreements) Regulations 2016. The change is effective from January 3 2018.
The code sets out certain minimum professional standards for persons providing financial services – in particular, those exercising a controlled function on a professional basis. It does not apply to persons exercising a controlled function concerned solely with the provision of a retail financial product, free of charge in conjunction with another financial product. The code aims to ensure that consumers obtain a minimum acceptable level of competence from staff acting for and on behalf of regulated firms in providing advice and information and associated activities in connection with retail financial products.
'Information' is now defined as:
"the provision of information, at a person's request or at the initiative of the firm, that may assist a person [in choosing] a retail financial product or in the context of the provision of MiFID services or activities."
The code specifically excludes certain types of information, including:
- staff pointing out where information can be found;
- the provision of a brochure or booklet without giving additional information; and
- information given in a newspaper, journal, magazine or other publication, which was previously encompassed under the definition of 'advice'.
'Advice' is now defined as "a personal recommendation to a person, whether at the person's request or at the initiative of the firm, in the course of performing a relevant function".
New qualification requirements
The main changes under the code relate to the qualification and experience requirements of the staff of financial services providers. The code sets out minimum standards where staff exercise a controlled function in relation to:
- regulated activities in respect of retail financial products, which include:
- insurance products;
- pensions;
- savings and investments;
- mortgage credit agreements; and
- consumer credit agreements; and
- MiFID services and activities.
All staff carrying out a relevant function must now:
- have a recognised qualification (as defined in the code);
- comply with the grandfathering provisions; or
- comply with the new entrants' provisions, which include participating in a training process.
Staff must also complete annual continuing professional development training and regulated firms must maintain written records of this training and review staff's development and experience needs.
The code also requires regulated firms to ensure that, in addition to obtaining a recognised qualification, staff have obtained the relevant competence and skills appropriate to the relevant function, through experience or training. Additional standards must be complied with where staff exercise a controlled function involving:
- insurance and reinsurance undertakings and insurance intermediaries;
- MiFID services and activities;
- mortgage credit; and
- design of retail financial products.
Regulated firms must conduct an annual review of their staff's development and experience needs. The code requires regulated firms to provide a certificate of such qualifications, if requested to do so by a consumer.
