6.4 High-Level Standards and the Training and Competence (T&C) Regime

The High-Level Standards are the top layer of the FCA Handbook. They set the cultural, governance and individual-conduct baseline that every other rule builds on. Together with the Training and Competence (T&C) regime, they govern how firms and individuals must behave, who can be approved to perform regulated functions, and how they must keep their knowledge up to date.

PRIN: Principles for Businesses

PRIN is the most important sourcebook at the top of the Handbook. Its 12 Principles (11 original plus PRIN 12 Consumer Duty from 31 July 2023) apply to every authorised firm and cannot be displaced by any other rule. They are framed in plain English so firms cannot box-tick their way out of good outcomes.

A breach of any Principle is independently enforceable, even if no detailed rule has been breached.

SYSC: Senior Management Arrangements, Systems and Controls

SYSC is the sourcebook on internal governance. It requires firms to put in place:

• Clear organisational structure with well-defined reporting lines (SYSC 7)
• Effective risk-management policies and procedures (SYSC 7)
• Compliance arrangements appropriate to the firm's nature, scale and complexity (SYSC 6)
• Outsourcing controls — the firm remains responsible for outsourced functions (SYSC 8)
• Conflict of interest management (SYSC 10)
• Whistleblowing procedures (SYSC 18)
• Climate-related financial risk disclosures for larger firms (SYSC 7A)

SYSC underpins the Senior Managers and Certification Regime (SMCR) by setting the systems and controls that senior managers are personally accountable for operating.

APER: Approved Persons Regime

APER sets out the approved persons regime that applies to firms outside the SMCR (typically PRA-regulated banks and insurers, and some small firms still under transitional arrangements). Under APER, individuals performing controlled functions (e.g. executive director, non-executive director, money laundering reporting officer) must be approved by the FCA before performing that function. The SMCR (covered in 6.5) is the modern equivalent for most FCA solo-regulated firms.

FIT: Fit and Proper Test for Approved Persons

FIT sets the test of fitness and propriety for individuals performing controlled functions. The test is not a checklist — it requires judgement by the firm and the regulator, considering:

• Honesty, integrity and reputation (FIT 2.1)
• Competence and capability (FIT 2.2)
• Financial soundness (FIT 2.3)

Regulatory history, criminal convictions, civil judgments, dismissals, and undisclosed matters will weigh against fitness. A firm must also assess fitness on a continuing basis, not just at approval.

TC: The Training and Competence Sourcebook

The Training and Competence (TC) sourcebook is the operational core of how the FCA ensures individuals who deal with clients have the knowledge to do so properly. It applies to firms and individuals involved in regulated activities that involve dealing with, advising, or managing for retail clients.

Key TC Requirements

Required Qualifications

For mortgage advisers, the appropriate qualification is CeMAP (Certificate in Mortgage Advice and Practice), or an equivalent such as the Level 3 Certificate in Mortgage Advice from another FCA-recognised awarding body. For retail investment advisers, the Level 4 Diploma in Financial Planning (or equivalent) is required, following the Retail Distribution Review (RDR) standards that took effect on 1 January 2013. The list of appropriate qualifications is maintained by the FCA and includes qualifications from bodies such as the Chartered Insurance Institute (CII), the London Institute of Banking & Finance (LIBF, now Walbrook Institute London), and the CISI.

Supervised Regime

New entrants must work under supervision until they have demonstrated competence. The typical stages:

1. Pre-entry study — pass the qualification exams
2. Supervised practice — advise clients while observed by a competent supervisor
3. Sign-off — the supervisor records that the trainee is competent to advise unsupervised
4. Ongoing monitoring — periodic reviews of files, calls and outcomes

CPD Requirements

Continuing Professional Development (CPD) is mandatory for all retail investment advisers and mortgage advisers. The FCA expects:

• 35 hours of structured CPD per year for retail investment advisers (RDR standard)
• Proportionate CPD for mortgage advisers — typically driven by firm policy but must maintain competence
• CPD must be relevant to the individual's role and include regulatory, technical and ethical content
• Records must be retained for at least 5 years and produced on request

CPD activities include: attending courses, reading regulatory publications, completing e-learning, professional body membership, and structured on-the-job learning. The FCA does not prescribe a fixed format but expects CPD to be documented, structured, and auditable.

How Individual Conduct Is Governed

The High-Level Standards govern individual conduct at three layers:

The Code of Conduct (COCON) under the SMCR applies to almost all staff in SMCR firms. Breaches are personally enforceable — the FCA can fine or prohibit an individual for breach of a Conduct Rule.

Why This Matters

For mortgage and investment advisers, the High-Level Standards and T&C regime together define what good looks like. An adviser who holds the right qualification, completes CPD, follows the Conduct Rules, and works in a firm with effective SYSC controls is well-placed to deliver the outcomes the FCA expects under PRIN and the Consumer Duty.

Key Takeaways

• High-Level Standards (PRIN, SYSC, APER, FIT, TC, COCON) sit at the top of the Handbook and apply to all firms
• PRIN 12 (Consumer Duty) was added on 31 July 2023, making 12 Principles in total
• SYSC sets governance requirements including organisational structure, risk management and compliance
• TC requires appropriate qualifications, supervised practice, sign-off and ongoing CPD
• Retail investment advisers complete 35 hours of structured CPD per year; mortgage advisers complete proportionate CPD