TC 1
Application and Purpose
TC 1.1
Who, what and where?
- 01/11/2007
- Past version of TC 1.1 before 01/11/2007
Who and what?
TC 1.1.1
See Notes
- 01/11/2007
- Past version of TC 1.1.1 before 01/11/2007
Where?
TC 1.1.2
See Notes
The territorial scope of this sourcebook
is set out in TC App 2.
- 01/11/2007
- Past version of TC 1.1.2 before 01/11/2007
Purpose
TC 1.1.3
See Notes
The competent employees rule is
the main Handbook requirement
relating to the competence of employees.
The purpose of this sourcebook is to support the FSA's supervisory function by supplementing
the competent employees rule for
retail activities.
- 01/11/2007
- Past version of TC 1.1.3 before 01/11/2007
Meaning of competence
TC 1.1.4
See Notes
In
this sourcebook, competence means having the skills, knowledge and expertise
needed to discharge the responsibilities of an employee's role.
This includes achieving a good standard of ethical behaviour.
- 01/11/2007
- Past version of TC 1.1.4 before 01/11/2007
TC 1.2
Actions for damages
- 01/11/2007
- Past version of TC 1.2 before 01/11/2007
TC 1.2.1
See Notes
- 01/11/2007
- Past version of TC 1.2.1 before 01/11/2007
Export chapter as
TC 2
Competence
TC 2.1
Assessing and maintaining competence
- 01/11/2007
- Past version of TC 2.1 before 01/11/2007
Assessment of competence and supervision
TC 2.1.1
See Notes
(1)
A firm must not assess an employee as competent to carry on an activity in TC Appendix 1 until the employee has demonstrated the necessary competence to do so and has (if required by TC Appendix 1) passedeach module of an appropriate examination. This assessment need not take place before the employee starts to carry on the activity.
- 01/11/2007
- Past version of TC 2.1.1 before 01/11/2007
TC 2.1.2
See Notes
A firm must not allow an employee to carry on an activity in TC Appendix 1 without appropriate supervision.
- 01/11/2007
- Past version of TC 2.1.2 before 01/11/2007
TC 2.1.3
See Notes
Firms should ensure that employees are appropriately supervised at all times. It is expected that the level and intensity of that supervision will be significantly greater in the period before the firm has assessed the employee as competent, than after. A firm should therefore have clear criteria and procedures relating to the specific point at which the employee is assessed as competent in order to be able to demonstrate when and why a reduced level of supervision may be considered appropriate. At all stages firms should consider the level of relevant experience of an employee when determining the level of supervision required.
- 01/11/2007
- Past version of TC 2.1.3 before 01/11/2007
Supervisors
TC 2.1.4
See Notes
Firms should ensure that those supervising employees carrying on an activity in TC Appendix 1 have the necessary coaching and assessment skills as well as technical knowledge to act as a competent supervisor and assessor. In particular firms should consider whether it is appropriate to require those supervising employees not assessed as competent to passan appropriate examinationas well except where the employee is giving advice on
packaged products, see TC 2.1.5 R.
- 01/11/2007
- Past version of TC 2.1.4 before 01/11/2007
TC 2.1.5
See Notes
Where an employee is giving advice on packaged products to retail clients and has not been assessed as competent to do so, the firm must ensure that the individual supervising and assessing that employee has passedan appropriate examination.
- 01/11/2007
- Past version of TC 2.1.5 before 01/11/2007
Examination requirements before starting activities
TC 2.1.6
See Notes
A firm must ensure that an employee does not carry on an activity in TC Appendix 1 (other than an overseeing activity) for which there is an examinationrequirement without first passing the relevant regulatory module of an appropriate examination.
- 01/11/2007
TC 2.1.7
See Notes
A firm must ensure that an employee does not carry on any of the following activities without first passingeach module of an appropriate examination:
(1) "advising and dealing" activities in TC Appendix 1;
(2) the activity of a broker fund adviser;
(4) the activity of a pension transfer specialist.
- 01/11/2007
TC 2.1.8
See Notes
- 01/11/2007
Exemption from appropriate examination requirements
TC 2.1.9
See Notes
(1) If a firm is satisfied that an employee meets the conditions in this rule then the requirements to have passedeach module of an appropriate examinationwill only apply if that employee is carrying on one of the activities specified in this rule.
(2) The conditions are that a firm should be satisfied that an employee:
(a) has at least three years' up-to-date relevant experience in the activity in question obtained while employed outside the United Kingdom;
(b) has not previously been required to comply fully with the relevant examinationrequirements in TC 2.1.1 R; and
(c) has passed the relevant regulatory module of an appropriate examination;
but (b) and (c) do not apply to an employee who is benefiting from the "30-day rule" exemption in
SUP 10.10.7B R
, unless the employee benefits from that rule because he is advising retail clients on
packaged products
or is a broker fund adviser.(3) The relevant activities are:
(b) the activity of a broker fund adviser;
(d) the activity of a pension transfer specialist.
- 01/11/2007
Selecting an appropriate examination
TC 2.1.10
See Notes
(1) This rule applies for the purposes of TC 2.1.1 R, TC 2.1.5 R, TC 2.1.6 R, TC 2.1.7 Rand
TC 2.1.9 R
.
(2) In ensuring that an examination is appropriate, a firm should select an appropriate examination from the list of examinations maintained by The Financial Services Skills Council.
(3) Compliance with (2) may be relied on as tending to establish compliance withthe rules referred to in (1).
- 01/11/2007
- Future version of TC 2.1.10 after 31/12/2010
Training needs
TC 2.1.11
See Notes
Firms should ensure that their employees' training needs are assessed at the outset and at regular intervals (including if their role changes). Appropriate training and support should be provided to ensure that any relevant training needs are satisfied. Firms should also review at regular intervals the quality and effectiveness of such training.
- 01/11/2007
Maintaining competence
TC 2.1.12
See Notes
A firm must review on a regular and frequent basis employees' competence and take appropriate action to ensure that they remain competent for their role.
- 01/11/2007
TC 2.1.13
See Notes
A firmshould ensure that maintaining competence for an employeetakes into account such matters as:
(1) technical knowledge and its application;
(2) skills and expertise; and
(3) changes in the market and to products, legislation and regulation.
- 01/11/2007
TC 3
Record Keeping
TC 3.1
Record-keeping requirements
- 01/11/2007
TC 3.1.1
See Notes
A firm must make appropriate records to demonstrate compliance with the rules in this sourcebook and keep them for the following periods after an employee stops carrying on the activity:
(1) at least 5 years for MiFID business;
(2) 3 years for non-MiFID business; and
(3) indefinitely for a pension transfer specialist.
- 01/11/2007
TC App 1
TC Appendix 1
TC App 1.1
Activities and Products/Sectors to which TC applies subject to TC Appendices 2 and 3
- 01/11/2007
TC App 1.1.1
See Notes
| Activity | Products/Sectors | Is there an appropriate examinationrequirement? | |
| Designated investment business carried on for a retail client | |||
| Providing basic advice | 1. | Stakeholder products excluding a deposit-based stakeholder product | No |
| Advising | 2. | Securities which are not stakeholder pension schemes or broker funds | Yes |
| 3. | Derivatives | Yes | |
| 4. | Packaged products which are not broker funds | Yes | |
| 5. | Friendly Society life policies where the employee is not reasonably expected to receive a remuneration of greater than £1000 a year in respect of such sales | No | |
| 6. | Friendly Society tax-exempt policies | Yes | |
| 7. | Long-term care insurance contracts | Yes | |
| 8. | Investments in the course of corporate finance business | Yes | |
| 9. | Advising on syndicate participation at Lloyd's | Yes | |
| Undertaking the activity in column 2 | 10. | Broker fund adviser | Yes |
| 11. | Pension transfer specialist | Yes | |
| Advising and dealing | 12. | Securities which are not stakeholder pension schemes or broker funds | Yes |
| 13. | Derivatives | Yes | |
| Managing | 14. | Investments | Yes |
| Overseeing on a day-to-day basis | 15. | Operating a collective investment scheme or undertaking the activities of a trustee or depositary of a collective investment scheme | Yes |
| 16. | Safeguarding and administering investments or holding client money | Yes | |
| 17. | Administrative functions in relation to managing investments | Yes | |
| 18. | Administrative functions in relation to effecting or carrying out contracts of insurance which are life policies | Yes | |
| 19. | Administrative functions in relation to the operation of stakeholder pension schemes | Yes | |
| Regulated mortgage activity and reversion activity carried on for a customer | |||
| Advising | 20. | Regulated mortgage contracts for a non-business purpose | Yes |
| 21. | Equity release transactions | Yes | |
| Designing scripted questions for non-advised sales | 22. | Equity release transactions | Yes |
| Overseeing non-advised sales on a day-to-day basis | 23. | Equity release transactions | Yes |
| Non-investment insurance business carried on for a consumer | |||
| Advising | 24. | Non-investment insurance contracts | No |
| Regulated sale and rent back activity carried on for a customer | |||
| Advising | 25. | Regulated sale and rent back agreements | No |
| Overseeing non-advised saleson a day-to-day basis | 26. | Regulated sale and rent back agreements | No |
| Notes: | |||
| 1. | In the Appendix the heading and types of business specified in the headings are to be read in conjunction with the paragraphs appearing beneath them. | ||
| 2. | Thus, for example, paragraph 24consistent with the heading above it, refers only to advice on non-investment insurance contracts given to a consumer. | ||
TC App 2
Appendix 2
TC App 2.1
TCs Territorial Scope subject to the limitation in TC Appendix 3
- 01/11/2007
TC App 2.1.1
See Notes
| UK domestic firm | Incoming EEA firm | Overseas firm (other than an incoming EEA firm) | |
| MiFID business and equivalent third country business |
TC applies in respect of employees who carry on activities from an establishment maintained by the firm (or its appointed representative) in the United Kingdom and TC also applies insofar as an activity is carried on from an establishment maintained by the firm (or its appointed representative or, where applicable, its tied agent) in, and within the territory of, another EEA State | TC does not apply | TC applies in respect of employees who carry on activities from an establishment maintained by the firm (or its appointed representative) in the United Kingdom |
| Insurance mediation activities |
TC applies in respect of employees who carry on activities from an establishment maintained by the firm (or its appointed representative) in the United Kingdom and TC also applies in respect of employees who engage in or oversee activities from a branch established in another EEA state | TC does not apply | TC does not apply |
| Regulated mortgage activity and reversion activity |
TC applies if the customer is resident in the United Kingdom at the time the regulated mortgage activity or reversion activity is carried on and TC also applies if the customer is resident in another EEA State (at the time that the activity is carried on) but only if the activity is carried on from an establishment maintained by the firm or its appointed representative in the United Kingdom | Same as for UK domestic firm | Same as for UK domestic firm |
| Any other activity in Appendix 1 |
TC applies in respect of employees who carry on these activities from an establishment maintained by the firm (or its appointed representative) in the United Kingdom and TC also applies in respect of employees who carry on activities with or for a client in the United Kingdom | TC applies in respect of its employees who carry on activities from an establishment maintained by the firm (or its appointed representative) in the United Kingdom | TC applies in respect of its employees who carry on activities from an establishment maintained by the firm (or its appointed representative) in the United Kingdom |
- 01/11/2007
TC App 3
Appendix 3
TC App 3.1
Circumstances in which TC does not apply
- 01/11/2007
TC App 3.1.1
See Notes
| Type of firm/activity | Application |
| Incoming EEA firm | This sourcebook does not apply where responsibility for any matter it covers is reserved by a European Community instrument to the firm'sHome State regulator |
| Incoming Treaty firm | This sourcebook does not apply where responsibility for any matter it covers is reserved by a European Community instrument to the firm'sHome State regulator |
| UCITS qualifier | This sourcebook only applies where it is relevant to the manner in which a firmcommunicates or approves a financial promotion |
| Authorised professional firm | TC does not apply with respect to its non-mainstream regulated activities (see PROF 5.2) |
| Incoming ECA provider | TC does not apply to an incoming ECA provider acting as such. |
Transitional Provisions and Schedules
TC TP 1
Designated Investment Business: Assessments of competence before commencement
TC TP 1.1
| 1.1 | R | (1) | This rule applies in respect of an employee of a firm employed at commencement who had, before commencement, been assessed as competent by a firm in accordance with the applicable rules of its previous regulator. |
| (2) | An employee described in (1) is exempt from the requirements in this sourcebook to pass an appropriate examination if the activity (or role of a supervisor) carried on by that employee after commencement is the same or substantially the same as that for which the employee had been assessed as competent before commencement. |
TC TP 1.2
| 1.2 | R | If an employee of a firm is exempted from an examination requirement under TC TP 1.1 R and any other firm subsequently employs the individual, that exemption continues to apply in respect of that subsequent employment on the same basis provided that: | |
| (1) | the activity which the employee carries on (or the role of the supervisor) continues to be the same, or substantially the same, as that in respect of which the employee had previously enjoyed the benefit of the exemption; and | ||
| (2) | the individual had not experienced any significant break in employment since the last employment in respect of which the individual had the benefit of an exemption under TC TP 1. | ||
- 01/11/2007
- Past version of TC TP 1 before 01/11/2007
TC TP 2
Designated Investment Business: Assessments of competence in 12 month period after commencement
| 2.1 | R | (1) | This rule applies in respect of an employee who had, on 31 October 2007, the benefit of an exemption under transitional rule 2 in TC TP 1.1 in the form it was in on 31 October 2007. |
| (2) | An employee described in (1) is exempt from the requirements in this sourcebook to pass an appropriate examination but only in respect of the activities in respect of which the employee had the benefit of that exemption as at 31 October 2007. | ||
| 2.2 | R | If an employee of a firm is exempted from an examination requirement under TC TP 2.1 and any other firm subsequently employs the individual, that exemption continues to apply in respect of that subsequent employment on the same basis provided that: | |
| (1) | the activity which the employee carries on continues to be the same, or substantially the same, as that in respect of which the employee had previously enjoyed the benefit of the exemption; and | ||
| (2) | the individual had not experienced any significant break in employment since the last employment in respect of which the individual had the benefit of an exemption under TC TP 2. | ||
| 2.3 | G | At 31 October 2007 transitional rule 2 in TC TP 1.1 applied to a firm whose employees at commencement had not been subject to any specific training and competence requirements of a previous regulator. This rule allowed the firm to assess such individuals as competent in the first twelve months after commencement without their having to pass an exam. The exemption applied only in respect of the activities which the individual was able to carry on before commencement where they were the same or substantially the same. | |
TC TP 3
Regulated Mortgage Contracts: Assessments of competence under the Mortgage Code Compliance Board Rules
| 3.1 | R | (1) | This rule applies: | |
| (a) | in relation to regulated mortgage contracts; and | |||
| (b) | in respect of an individual employed by a firm at 31 October 2004. | |||
| (2) | If the individual described in (1) was assessed as competent by the firm before 31 October 2004 in accordance with the rules of the Mortgage Code Compliance Board applying immediately before 31 October 2004, the individual is exempt from the requirements in this sourcebook to pass an appropriate examination provided that: | |||
| (a) | the activity which the individual carries on continues to be the same, or substantially the same, as that immediately before 31 October 2004; and | |||
| (b) | the individual had not experienced any significant break in employment since the last employment in respect of which the individual had the benefit of an exemption under this rule. | |||
| 3.2 | R | If an employee of a firm is exempted from an examination requirement under TC TP 3.1R and any other firm subsequently employs the individual, that exemption continues to apply in respect of that subsequent employment on the same basis provided that: | ||
| (1) | the conditions in TC TP 3.1R(2)(a) and (b) are met; and | |||
| (2) | the firm assesses the individual to be competent in accordance with TC 2.1.1 R. | |||
- 01/11/2007
TC TP 4
Home Reversion Plans: Assessments of competence before 6 April 2007 in relation to lifetime mortgages
| 4.1 | R | (1) | This rule applies in respect of an individual employed by a firm at 6 April 2007, if that individual had before that date been assessed as competent by the firm in relation to: | |
| (a) | advising on lifetime mortgages; | |||
| (b) | designing scripted questions for use in non-advised sales to customers of lifetime mortgages; or | |||
| (c) | overseeing non-advised sales of lifetime mortgages. | |||
| (2) | An individual in (1) is exempt from the examination requirements in this sourcebook in relation to activities carried on concerning home reversion plans that correspond to those in (1) provided that: | |||
| (a) | the individual has been assessed as competent to apply the knowledge and skills necessary to carry on the relevant home reversion activity before 6 April 2007; | |||
| (b) | the home reversion activity which the individual carries on continues to be the same, or substantially the same as that which the individual carried on immediately before 6 April 2007; and | |||
| (c) | the individual had not experienced any significant break in employment since the last employment in respect of which the individual had the benefit of an exemption under this rule. | |||
| 4.2 | R | If an employee of a firm is exempted from an examination requirement under TC TP 4.1R and any other firm subsequently employs the individual, that exemption continues to apply in respect of that subsequent employment on the same basis provided that: | ||
| (1) | the conditions in TC TP 4.1R(2)(b) and (c) are met; and | |||
| (2) | the firm assesses the individual to be competent in accordance with TC 2.1.1 R. | |||
| 4.3 | R | TC TP 4 does not apply to an individual in TC TP 4.1R(1) after 6 April 2009 unless the individual passes an appropriate home reversions top-up examination before that date. | ||
- 01/11/2007
TC TP 5
Home Reversion Plans: Assessments of competence before 6 April 2007 in relation to Home Reversion Plans only
| 5.1 | R | (1) | This rule applies in respect of an individual employed by a firm at 6 April 2007 (other than an individual described in TC TP 4.1R). | |
| (2) | The individual in (1) is exempt from the examination requirements in this sourcebook in relation to the following: | |||
| (a) | advising on home reversion plans; | |||
| (b) | designing scripted questions for use in non-advised sales to customers of home reversion plans; or | |||
| (c) | overseeing non-advised sales of home reversion plans. | |||
| (3) | The exemption in (2) only applies if: | |||
| (a) | the individual has been assessed as competent to apply the knowledge and skills necessary to engage in or oversee the relevant home reversion activity before 6 April 2007; | |||
| (b) | the home reversion activity which the individual carries on continues to be the same, or substantially the same as that immediately before 6 April 2007; and | |||
| (c) | the individual had not experienced any significant break in employment since the last employment in respect of which the individual had the benefit of an exemption under this rule. | |||
| 5.2 | R | If the individual has not passed an appropriate examination before 6 April 2009, the individual in TC TP 5.1R(1) will cease to be exempt from the appropriate examination requirement. | ||
| 5.3 | R | If an employee of a firm is exempted from an examination requirement under TC TP 5.1R and any other firm subsequently employs the individual, that exemption continues to apply in respect of that subsequent employment on the same basis provided that: | ||
| (1) | the conditions in TC TP 5.1R3(b) and (c) are met; and | |||
| (2) | the firm assesses the individual to be competent in accordance with TC 2.1.1 R. | |||
- 01/11/2007
TC TP 6
Transitional provisions relating to assessments of competence generally
| 6.1 | G | If appropriate, a firm may treat a competence assessment carried out under TC in the form it was in before 1 November 2007 as being sufficient to satisfy TC 2.1.1 R. | ||
- 01/11/2007
TC TP 7
Transitional provisions relating to waivers from existing examination requirements
| 7.1 | R | (1) | This provision applies to a firm which benefited from a waiver from an examination requirement in TC prior to 1 November 2007 in respect of an employee. If such a firm would otherwise find itself in breach of an examination requirement in TC from that date as a result of the re-categorisation of clients in COBS, the firm may allow that employee to continue carrying on the activities in respect of which the waiver was granted until 31 October 2008 though he has yet to satisfy the relevant examination requirement in TC. | |
| (2) | If an employee of a firm is exempted from an examination requirement under TC TP 7.1(1) and any other firm subsequently employs the individual, that exemption continues to apply in respect of that subsequent employment on the same basis provided that: | |||
| (a) | the activity which the employee carries on continues to be the same, or substantially the same, as that in respect of which the employee had previously enjoyed the benefit of the exemption; and | |||
| (b) | the employee had not experienced any significant break in employment since the last employment in respect of which the relevant exemption was granted. | |||
- 01/11/2007
TC Sch 1
Record keeping requirements
- 01/12/2004
TC Sch 1.1
See Notes
| TC 3.1.1 R provides: | |
| A firm must make appropriate records to demonstrate compliance with the rules in this sourcebook and keep them for the following periods after an employee stops carrying on the activity: | |
| (1) | at least 5 years for MiFID business; |
| (2) | 3 years for non-MiFID business; and |
| (3) | indefinitely for a pension transfer specialist. |
- 01/11/2007
- Past version of TC Sch 1.1 before 01/11/2007
TC Sch 2
Notification requirements
- 01/12/2004
TC Sch 2.1
See Notes
| There are no notification or reporting requirements in TC. |
- 01/11/2007
- Past version of TC Sch 2.1 before 01/11/2007
TC Sch 3
Fees and other required payments
- 01/12/2004
TC Sch 3.1
See Notes
| There are no requirements for fees or other payments in TC. |
- 01/11/2007
- Past version of TC Sch 3.1 before 01/11/2007
TC Sch 4
Powers exercised
- 01/12/2004
TC Sch 4.1
See Notes
- 01/11/2007
- Past version of TC Sch 4.1 before 01/11/2007
TC Sch 4.2
See Notes
- 01/12/2004
TC Sch 5
Rights of action for damages
- 01/12/2004
TC Sch 5.1
See Notes
| The table below sets out the rules in TC contravention of which by an authorised person may be actionable under section 150 of the Act (Actions for damages) by a person who suffers loss as a result of the contravention. |
- 01/11/2007
- Past version of TC Sch 5.1 before 01/11/2007
TC Sch 5.2
See Notes
| If a "Yes" appears in the column headed "For private person?", the rule may be actionable by a "private person" under section 150 (or, in certain circumstances, his fiduciary or representative). A "Yes" in the column headed "Removed" indicates that the FSA has removed the right of action under section 150(2) of the Act. If so, a reference to the rule in which it is removed is also given. |
- 01/12/2004
TC Sch 5.3
See Notes
| The column headed "For other person?" indicates whether the rule is actionable by a person other than a private person (or his fiduciary or representative). If so, an indication of the type of person by whom the rule is actionable is given. |
- 01/12/2004
TC Sch 5.4
See Notes
Table: Actions for damages: Training and Competence sourcebook
| Right of action under section 150 | |||||
| Chapter/Appendix | Section/Annex | Paragraph | For private person | Removed | For other person |
| Rules in TC | No | Yes TC 1.2.1 R | No | ||
- 01/11/2007
- Past version of TC Sch 5.4 before 01/11/2007
TC Sch 6
Rules that can be waived
- 01/12/2004
TC Sch 6.1
See Notes
- 01/11/2007
- Past version of TC Sch 6.1 before 01/11/2007