I have been thinking a lot lately about exams and studying while working. You’ve really got to be motivated to do extra study after working all day. It’s made me think about the reasons behind sitting work-related exams. There are usually two routes that people take: sit the exams required to get qualified and they’re done, or they continue to study throughout their professional career. Both are equally valid. But staying up to date by continual study, particularly in a compliance role, ensures that you are not missing anything – regulations change constantly!

Exams require dedication and commitment (in terms of physical time), but the knowledge gained at the end is invaluable – which can really enhance your confidence in your day to day role. Exams are not the only way to learn, but for me, they really cemented my knowledge and understanding of the practicalities that I had picked up from the general work environment. My day-to-day role is predominantly file checking, and it’s not surprising that the more exams I did, the better placed I felt to do file checks. The more I knew, the more I felt like I could confidently challenge advisers if I felt something was wrong, or hadn’t been fully explored.

However, the more exams I sat, the more I began to realise that the majority of exams are focused on investments, investment vehicles and tax planning, with a little bit of regulation thrown in. These are all important aspects of my work, but how does this help people absorb compliance and regulation, especially if they are not in compliance roles? These seem to be a ‘throwaway’ part of revision, which negates the importance of learning and understanding regulation.

I was recently sitting in on a hosted revision day, and a student asked the exam trainer how much of the ‘compliance rubbish’ he needed to know from chapter one. The trainer replied that he thought it was highly unlikely that there would be a question on it in the paper. Even if there was then with a 60% pass rate, the student had 40 marks to lose, and this could be one of those areas he could lose marks!

I would love to think this is an anomaly, but often people study to pass exams, not to retain the WHOLE knowledge. While some compliance content is included in exams, how many people are actually paying any attention to it? Do people just focus on the big point makers and the compliance piece is an opportunity lost?

This leads me to ask, does compliance have the reputation it does simply because people chose not to understand it fully? How many people tactfully sit exams and just hope for the best that what they don’t know doesn’t come up?

There currently isn’t a specific exam that people can do to help them understand the basic compliance fundamentals. There are compliance theory-based courses, but nothing that assesses the practical application of compliance in financial services.

Compliance gets such a bad name within the industry as being the ‘business prevention unit’ to advisers, but I wonder whether this would remain the same widely spread opinion if more people had the opportunity to immerse themselves in the compliance fundamentals. If they could gain real-life experience working in a compliance department or holding a compliance function, then this would lead to an understanding of how this can benefit and protect firms.

This could lead to compliance being deeply embedded into every aspect of a firm – a benchmark that the FCA has been trying to reach for years. With the new Consumer Duty piece coming into force this summer, more firms could really benefit from having more people with a fundamental understanding of compliance and regulation in whatever role they have. Compliance is not a barrier to business – it’s a protection against bad business – both for the firm and for the end client.

The most knowledgeable individuals within the compliance world are the ones that have years of experience (which is the same for most job roles), but would a compliance basics exam help people get their foot on the ladder in terms of understanding? While R01 touches on compliance fundamentals, again this is mainly theoretical and high level; there is so much more that goes on within the compliance function than R01 (thankfully!).

As well as my file checking role, I also sit within the regulatory team assisting with FCA applications and have now started to be able to put together knowledge from my studies and my experience with the FCA.

We are currently seeing considerable pushback from the FCA regarding SMF16 (compliance function) applications lately. The questions received are focusing on what direct experience and knowledge applicants have in relation to the SMF16 function. This to me could be described as the ‘chicken and the egg’; how do you get experience of the role without having previously held it? There are events and webinars that candidates can attend and some exams such as AF6 and J07, however, these are much more supervisory focused as opposed to actual day-to-day compliance experience, so it’s not real or practical experience.

Do you think there should be a practical compliance-based qualification?

Obviously, this whole brain dump has been a hot topic for myself and the team in the office. But there was one more thing we discussed – the changing of exam syllabus and the validity of qualifications.

The exam in question was AF7 and we were reflecting on just how different the syllabus was five years ago to now. If the syllabus is so different, this begs the question: is the qualification still relevant? While we appreciate that advisers, specifically PTS, have CPD requirements, ultimately the content of that CPD is up to you as an individual. How can we as an industry be sure that qualified individuals are keeping on top of such large regulatory changes? Now, don’t get me wrong, anyone practicing as a PTS wouldn’t go long without it being evident that they were slipping behind, but if we apply this to a non-specialist role, it is slightly concerning.

Ultimately, we are in a regulated industry that is constantly changing and evolving; is it time to review how initial understanding and ongoing knowledge is tested and to really hammer home the importance of that understanding at every level and for every role? We think so.

Alanis Daniel – Regulatory Support