• Robert Bell

Increase Staff Retention and Lower Recruitment Costs with SM&CR


As of 2018, the relevant section of The Bank of England and Financial Services Act 2016 will be fully implemented by the FCA. This essentially means the Senior Management and Certification Regime will apply to all firms regulated by the FCA, including consumer credit firms.

So what does this mean for you? It is the perfect opportunity to review how you assess the knowledge, skill and ability of your team.

Certification Regime

Let’s consider what the typical “assessment” looks like in our industry.

Usually at the end of induction training a team member will sit a written exam, perhaps multiple choice. There are two issues with this:

  1. Multiple choice questions don’t properly assess ability

  2. You are not factoring in the learning needs of individuals

Let’s explore these in more detail. I’m sure we all remember learning that we have a test coming up and dreading it, only to rejoice when we find out that it is a multiple choice exam. Why? Because it is easy. Our staff feel exactly the same, so, instead we should focus on creating an assessment which gives the firm a genuine understanding of the staff member’s…well….understanding.

Multiple choice exams or traditional exams can be used if you are looking to simply tick a box to say that you have “certificated” your team but surely we value our staff genuinely coming out of induction and refresher training with the knowledge and ability to do their job. A well thought out assessment is the only true way to do that and if I was a lender looking to outsource accounts I would look for a firm which takes certification seriously and has the developed understanding of proper education and assessment methods.

So, how do we assess properly?

This brings us onto our next point, factoring in the individual’s learning needs. People all learn differently; some learn through reading, others by doing and others through being told. If you want the best out of your inductees, and the best bang for your buck in terms of recruitment costs, you should conduct a learning need analysis at the very start of training. This allows the tutor to ensure that each learner is taught in a way which works for them. Assessments are exactly the same; we need to appreciate that not all learners will perform well in a written exam, verbal assessment, practical assessment or essay style assignment. The best approach is to understand this at the outset and allow the learner to be assessed through their preferred method; that way you are genuinely measuring their knowledge. This increases inductee retention, thus reducing recruitment costs.

It sounds like a lot of additional work, it is not. The technique is to embed the assessment throughout the induction so you are not simply assessing at the end. There are two advantages to this approach, firstly you have the opportunity to re-teach anything which has not been understood – increasing the ability of your team member – secondly you are assessing while you teach, meaning an end to marking exams after the session!

How does the above fit with the new certification regime?

In short, you will need to have procedures in place to assess the fitness of staff members before allowing them to undertake a role which may impact customers. Our point is this...As we have to assess the fitness of our team we may as well do it in an effective and resource friendly manner.

This regime only applies to ‘material risk-takers’. Material risk takers are staff who pose a risk of significant harm to the firm or any of its customers regardless of seniority within the firm. The certification regime is not likely to affect only a few people within your firm but the majority of staff; for example, those providing advice to customers are currently expected to be certificated. This is a good point to bring to your attention the fact that the FCA has clarified the meaning of financial advice and you should see our separate guidance on this subject which is written about in our article entitled, "Financial Advice - What's in a phrase?"

Next Steps

Why not review how you currently assess your team? We can benchmark you against industry norms and, through our flexible consultative approach, give you a brand new and effective assessment process which is fully compliant with SMCR.

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