Coronavirus - CPD Deferral

YOUR COMPLIANCE MATTERS:   Coronavirus - CPD Deferral

Relevance:                 All firms.

Action required:       Awareness

Individuals involved in insurance distribution have been required to complete a minimum number of 15 hours of CPD (Continuing Professional Development) covering certain topics on an annual basis. This requirement has been effective since 01 October 2018.

But the FCA has recognised that there may be instances where an individual will not be able to complete the minimum number of CPD hours due to circumstances surrounding the current pandemic. These “exceptional circumstances” have been identified by the FCA, as follows:

·        When individuals during the current pandemic:

o  are needed to carry out extra duties to manage risks, and/or to provide support, to consumers and businesses during the current situation;

o  have caring responsibilities, such as having to care for a partner, child, parent, grandparent or sibling;

o  have difficulties accessing CPD material, for example, due to technical difficulties or unavailable material, and

·        Where it is not realistic to expect the individual also to fulfil the CPD requirements.

In a recently issued statement, the FCA has indicated that “in these exceptional circumstances we are also allowing firms to defer individuals’ CPD to the next CPD year.”

So, if a firm agrees that due to “exceptional circumstances”, an individual is unlikely to achieve the minimum 15 hours of CPD, and as a temporary position;

·        it will be possible to allow that individual to carry-over any uncompleted CPD hours to the next CPD year, i.e. the next 12-month period in which to complete the relevant CPD.

·        This applies to CPD years ending before 01 April 2021.

·        The carried over hours will be treated as part of the required CPD hours of that next CPD year on top of the hours already required.

·        For example,

o  if an individual who is required to complete a minimum of 15 hours of CPD by 30th September 2020, has completed 10 CPD hours and therefore has 4 months left of the current CPD year, the firm may allow them to transfer 5 hours to their next CPD year.

o  This means that in the next CPD year (to 30th September 2021) the individual will need to complete 20 CPD hours.

·        Where a firm has made the decision to carry over uncompleted CPD hours to the next CPD period, in accordance with the FCA’s guidance, the FCA will treat the firm as having complied with the requirements for the current CPD period.

Firms should record their decision and the reasons for it, including the number of CPD hours the individual is carrying over to the next CPD year, but do not need to report this to the FCA.

However, it has to be remembered that the CPD requirement has not been abandoned; it has been deferred.

Equally, the FCA has also included some soft warnings about how it sees the operation of CPD and overall competence. The FCA states: “we expect firms to continue to demonstrate that relevant individuals remain competent to carry out their work. This includes employees as referred to in the Training and Competence sourcebook and employees carrying on insurance distribution activities as referred to in SYSC 28.2 and TC 4.2.  Effective and consistent CPD is an essential part of this.”

They also expect that:

·        most individuals will be able to continue completing CPD whilst on furlough or working from home; and

·        firms will support furloughed staff with materials to complete their CPD, as they have done previously; and

·        firms will continue to demonstrate that individuals "remain competent to carry out their work".

Please also note that this only applies to the regulatory CPD requirement and anyone who is a member of an accredited body, such as the CII (Chartered Insurance Institute), should check the position with that body.