Your employees need appropriate training before working with a reduced level of supervision.
On this page 
You must ensure that employees have demonstrated the necessary competence in terms of skill and knowledge before they work with a reduced level of supervision. This guide sets out some examples of good practice in recruiting, training and supervising your employees.
Good practice in recruitment
- Having a recruitment process in place to ensure the individual is suitable for the role.
- Clearly establishing roles and responsibilities and documenting them.
- Putting in place an appropriate initial training plan.
Good practice in qualifications and training
- Having a training plan for the forthcoming year, with time scheduled in advance for training events.
- Encouraging advisers to obtain higher qualifications and improve their knowledge and skills.
- Discussing complex cases in recorded training events.
- Using a variety of training and assessment methods for developing competence, such as:
- sitting a relevant mock exam
- product and market training, and
- practical training, such as mock sales interviews
- Ensuring appropriate examinations get taken and passed within a reasonable timescale.
- Regularly evaluating the effectiveness of training.
Good practice when supervising staff
- Having procedures to ensure supervisors are properly trained and competent.
- Clear criteria and procedures for assessing competence of advisers.
- Measurable benchmarks for the development of non-competent staff to competence and clear timescales for this to happen.
- Testing knowledge and following-up weaknesses.
- Assessing questioning, advising and presentation skills.
- Making records of observations or development points and following these up where appropriate.
- Reassessing competence regularly and using the results to influence the level of supervision.
Risks to customers from performance management
A firm’s culture is an important element in ensuring that consumers are at the heart of how their business is run. The way staff are incentivised and their performance is managed is a key driver of a firm’s culture.
We have previously reported on the risks from financial incentives, noting the positive progress there has been in this area. We have also previously highlighted the importance of ensuring that progress with financial incentive structures for frontline staff is not undermined by other performance management practices.
We have seen an increase in the level of intelligence about poor performance management practices in sales areas. We have not identified evidence of widespread issues, but we have identified instances of poor practice through our follow-up work on whistleblowing reports. As well as addressing these issues, we have engaged with a number of firms to discuss their approach to performance management. We have not undertaken a program of direct assessments of how firms manage performance.
We have published guidance and a thematic review[1]. This is a forward-looking report that aims to help firms improve practices in this area, where needed, to ensure mis-selling risks are adequately managed.
Does this apply to all firms of all different sizes?
This guidance is relevant to all types of firms with staff who deal directly with retail customers, and some SME customers, where relevant. It applies to firms of all sizes, including smaller firms, with staff giving advice, undertaking sales or providing a service and where performance management practices are in operation. It does not apply where the business owners are the only individuals selling products or services, or providing advice (e.g. sole traders, partners or directors). The approaches that smaller firms might take to managing these risks will depend on the nature, scale and complexity of the firm’s business.
The FCA’s remit on performance management
Pressure from challenging and stretching objectives and regular discussions about progress is not unexpected in any job. It is not our role to prescribe how a firm should manage the performance of their staff. Our focus is on the risks that are posed to consumers by poor performance management practices which can lead to undue pressure on staff about sales results, which can increase the risk of mis-selling and poor advice.
What firms need to do
All firms with staff who deal directly with retail customers should read this report and take action where required to ensure they are managing the risks of mis-selling.
Senior management should ensure that the risks of poor practices within their firm have been identified and adequate controls are in place. The guidance aims to help firms do this. For example:
- Having objectives for sales staff that are more balanced and include sufficient ‘how’ or behavioural measures, including consumer outcomes, as opposed to just the ‘what’ (eg, sales results).
- Monitoring communications about sales results and records from formal procedures, such as appraisals, to look for signs of undue pressure on advisers or other staff.
- Putting together a range of information to pro-actively create a picture of where undue pressure on staff might be occurring.
- Undertaking increased monitoring where areas of increased risk are identified.
Rules related to performance management
This guidance relates to Principle 3 of the FCA Principles for Businesses[2] and the applicable rules in SYSC in the FCA Handbook[3], which sets out organisational and systems and controls requirements for firms.
The Equality Act 2010
The Equality Act 2010 streamlined all existing equality law in the UK. Equality law applies to everyone regardless of the size of the organisation.
The Equality Act is built on values of fairness and, while it covers a range of areas, it is straightforward and may require little, if any modifications to your business.
Here we highlight two important aspects to consider – however, guidance on other areas is available on the Equalities and Human Rights Commission’s website[4].
What this means for employers
You should be aware of the 9 ‘protected characteristics’[5]:
- age
- disability
- race
- sex
- sexual orientation
- gender reassignment
- marriage and civil partnership
- pregnancy and maternity, and
- religion or belief
You should ensure that when making decisions on such areas as recruitment, pay and benefits or training, your business practices do not unlawfully discriminate by treating some people worse than others:
- because of a protected characteristic, because they are associated with a person with a protected characteristic, or
- because they are perceived to have a protected characteristic
You must also ensure you are not doing something that has a worse impact on those who share a protected characteristic than those who do not.
What this means for service providers
An important part of the Equality Act is the duty to make reasonable adjustments. Where you provide a product or service to the public you are required to consider whether there are any barriers to consumers with a disability accessing what you offer. Where you identify an obstacle you should consider what you can do to remove it or make changes to improve access. Where these changes are reasonable – which depends on the nature of the product and the size of your business – you are expected to make them.
Our Public Sector Equality Duty
We are a named body to whom the Public Sector Equality Duty applies. This means that we have to exercise due regard to eliminating discrimination and promoting equality of opportunities in our role as an employer and regulator. We look to promote and encourage diversity and inclusion across the sector.