What firms must evidence on CPD and how to structure it

Be honest, when you think about firm wide CPD do you think adviser competence or do you think FCA box ticking?

Here’s the reality, when the FCA looks at your companies CPD records, they aren’t just checking whether you have a training file for your adviser populations. They are checking whether your firm can demonstrate ongoing competence, that each of your advisers have met the required minimum CPD hours, and that it’s all backed by evidence that actually stands up to scrutiny.

But what is the real FCA expectation?

For FCA purposes, recorded CPD is evidence that an adviser:

• Is keeping their technical knowledge up to date
• Understands why that knowledge is relevant and can apply it appropriately

More broadly, the FCA will also consider submitted CPD in the context of their role of ensuring that regulated businesses have a robust Training & Competence (T&C) framework, including the appropriate recording of the adviser CPD record.

Your evidence should make it clear that CPD is linked to specific role requirements, client outcomes, and is clearly identifying learning needs and gaps. For example, if you are a Pension Transfer Specialist (PTS) you will have to evidence an additional 15 hours of PTS knowledge (more below on the specifics of these hours).

The benchmark for financial advisers

The FCA’s standards sets out clear guidelines as follows:

• 35 hours CPD per year
• 21 hours must be structured
• An additional 15 hours (so 50 in total) if you are a Pension Transfer Specialist

Structured CPD – must have learning outcomes and will often involve testing the knowledge attained (think short exam following reading / watching / interacting)

Unstructured CPD – this typically includes activities like reading, research, but without specific learning outcomes and testing (think reading industry press articles)

One thing I hear time and time again is advisers cramming CPD at the end of the year, usually around their Statement of Professional Standing (SPS) renewal date! But a far more practical way to manage this is to plan your annual CPD in bite sized chunks for example 3 hours per month with 2 of those hours being structured. It’s not a big ask and embedding it as a monthly habit is a far more practical way of managing those 35 hours and ultimately helps improve quality of learning.

CPD evidence has to show the need, detail the activity and demonstrate learning outcome

It sounds obvious but recording CPD this way means that any future audit can be evidenced easily and clearly. In plain terms, your records should evidence three things:

What’s the need?

Where are your knowledge gaps, what are your development areas, what are the learning outcomes from this activity?

What did you actually do?

The activity description, the time logged, and whether it was structured or unstructured learning.

How was the need actually met?

Remember your reflective statement, how did it tie into day to day application of your role, what have you actually learned?

Remember you want your CPD record to be “FCA audit ready” and there are lots of CPD recording and reporting tools that do the job for you.

What does ‘good’ mean for firms when evidencing?

Strong T&C schemes also evidence a good competence ‘mix’ such as:

• Technical knowledge around product groups like tax, pensions, regulation, investment etc. Think adviser competency testing.
• Advice skills like fact-finding, suitability, vulnerability, communication skills, so think around the softer more behavioural aspects here.
• Regulatory and ethical behaviours such as conduct rules, money laundering, data protection, and financial crime controls.
• Role-specific risk areas, for example esoteric investments, DB transfers, or drawdown.

The FCA suggest that CPD evidence can cover technical knowledge, skills and behaviours, and changes to products/legislation/regulation. All this learning should ultimately address individual learning gaps / needs.

CPD evidence matters at firm level, but it matters at adviser level too

Advisers must hold a Statement of Professional Standing (SPS) which involves an annual declaration that includes CPD requirements being met. Professional bodies do carry out checks of advisers, and the FCA states that you may be asked to submit CPD records for review (name drawn out a hat situation but happens each year). That means your evidence should always be “audit-proof” and evidenced with attendance certificates, results, screenshots, notes, and a clear log.

Getting to brass tacks – what does the FCA typically expect a firm to produce on request?

In summary, you can expect at least this:

• Your T&C framework, i.e. how you assess, supervise, sign off, and remediate competence.
• Role profiles and competence ‘matrices’ so basically what good looks like for each role in the business.
• Individual competence records such as T&C supervision notes, file-check reviews, KPI records etc.
• CPD logs (and this is per individual adviser) which should include CPD hours, splits, learning outcomes, reflective statements, certificates and so on.
• SPS status.
  

Are there common failure points in firms?

Yes, but the good news is that there are also quick fixes. Here are the two biggest I hear when speaking with clients:

You have a CPD record but no (or few) reflective statements.

This happens often but regular review of records keeps you on top of this and ultimately allows you to ensure the advisers update their reflective statements in real time (or as close to that as possible).

You are trying to cram all CPD at year end.

A very common problem for firms but with an easy fix… Set minimum quarterly CPD reviews and ideally monitor monthly.

Good CPD isn’t about box ticking it’s about upskilling knowledge in a way that has real world application, ultimately it keeps you at the top of your game and why wouldn’t you want that?