A successful business depends on developing employees who perform at their best. The case can be made that T&C regulation—paired with the right compliance software solution—accomplishes just this
Regulation is traditionally seen as the enemy of business. The impediment to a company moving freely, quickly, and innovatively in pursuit of profit. A box-checking burden to be battled or skillfully avoided at all costs. But what if a regulation came on the scene that offered the hope of a better-run business? A business that operated from a foundation of utmost certainty in the people who worked there?
The case can be made that such a type of regulation is currently gaining traction in the world of financial services. Known as training and competency, or T&C, regulation, it asks for formal frameworks and monitoring systems to be put in place to ensure that employees in critical roles are qualified to do their jobs. Firms in a growing number of jurisdictions must now ensure compliance with such regulations.
Of course, there’s no getting around the fact that any new regulation places greater demands on firms and their compliance teams. T&C is no exception. But is it fair to say T&C is nothing more than a box-checking burden? Or does T&C unlock an opportunity to create the kind of certainty in the employee base that provides the foundation for a better business? Let’s answer this question step-by-step.
WHAT T&C IS AND WHY IT’S REQUIRED
A successful business depends on developing employees who perform at their best. This means not only hiring the right people to start with, but also providing ongoing training and assessment to ensure they remain competent and that they can grow and flourish. Employers, of course, also have the responsibility of making sure their people “play by the rules.” This requires staff to be educated and kept up to date on appropriate conduct and best practices, with a framework in place to evaluate performance and compliance—both with the firm’s own policies and the regulator’s expectations.
All of these challenges are what T&C is designed to address. In the wake of the financial crisis, regulators around the world wanted to better ensure that the people in critical financial services roles knew what they were doing, so as to help prevent any similar future meltdown. Thus, the expansion of T&C regulation globally. This kind of regulation means firms must have clear learning management system (LMS) processes and controls in place to maintain the level of competence required to deliver optimal client outcomes, and the ability to demonstrate compliance with local regulatory requirements. In the UK, for example, businesses subject to the FCA’s T&C regime must be able to assess and maintain competence and training needs, and ensure adequate levels of employee supervision are in place.
WHY T&C IS POTENTIALLY BURDENSOME
There’s no doubt that developing a firm’s most valuable asset, its people, is a huge and perhaps even daunting responsibility—one that can be operationally challenging, especially in firms subject to the ever-expanding and evolving body of financial regulation. Heavy reliance on manual processes to manage, track, and report on T&C requirements and programs doesn’t help: often leading to incomplete results. Manual processes also tend to be more error-prone and are definitely more inefficient: taking up valuable employee effort that could be spent more productively elsewhere. This translates into higher costs for the business and risks staff “falling through the cracks,” with opportunities to identify and cultivate potential leaders missed, as well as potential problems going unnoticed.
WHY T&C DOESN’T HAVE TO BE BURDENSOME
Unlike compliance programs that are all too often limited in scope and disconnected from other initiatives, a strong T&C program goes beyond merely checking a regulatory compliance box. Rather, the right approach creates an opportunity to identify gaps in employees’ knowledge and skills, and to plug these gaps by proactively delivering the necessary support to employees at all levels of the firm.
With the right T&C tools in place, employees gain easy access to the content they need and the ability to take this information with them if they change roles. Effective T&C also enables good behaviors and accountability to be instilled in staff and emulated across all departments and individuals within the firm. This contributes to a productive, healthy working environment, and lays the foundation for developing competent leaders and employees who foster a positive culture and strengthen the reputation of the business—delivering results beyond the old-school view of simple box-checking.
And specialist compliance software solutions can streamline and automate T&C processes: from the implementation of training programs to monitoring staff participation and evaluating program effectiveness. Not only does this increase workflow efficiency, it also improves the quality of people—delivering better outcomes for the firm and its clients while protecting its reputation. Such software also reduces the risk of failing to identify and develop talent, or hiring and promoting the wrong people; and as it fully integrates with other firm systems, it can break down internal data silos to provide a holistic view of all employees—providing a single picture of employee performance, compliance, risk, conduct, and competency across the organization.
TURNING T&C INTO TRUST AND CERTAINTY
All of this put together creates trust and certainty. Two-way trust is built through empowering your employees to fulfill their roles effectively and, in turn, leads to them trusting the firm to help them reach their full potential. Certainty is knowing that the right people on your team are in the right roles, and that you are meeting your T&C obligations: further strengthening trust between all stakeholders. The result for your clients is trust in the firm to deliver the best possible results, and certainty in their relationship with a reputable organization. The opportunity, then, is this: use the advanced tools and intelligence of a comprehensive T&C program to reduce the burdens of compliance, go beyond mere box-checking, and build an effective, productive, positive culture that results in a stronger business all around.