Competency frameworks for advice firms: design, version and apply

Ask two supervisors in the same firm what a competent adviser looks like and you will often get two different answers. Both will be reasonable. Neither will be written down in a way that a third person could apply. When the firm then assesses its advisers, the result depends as much on who did the assessing as on how the adviser performed.

A competency framework fixes that. It is the firm's written standard for what good looks like, broken into competencies, levels and evidence, so that assessments are consistent and can be explained later. This guide covers how to design one, how to version and date it, and how to make sure assessors apply it the same way.

Why a competency framework matters under the TC rules

The FCA's Training and Competence sourcebook does not prescribe a framework, but its requirements are hard to meet without one. Under TC 2.1:

• A firm must not assess an employee as competent until they have "demonstrated the necessary competence" (TC 2.1.1R). The framework defines what "necessary" means in your firm.
• Guidance at TC 2.1.3G says firms should have "clear criteria and procedures relating to the specific point at which the employee is assessed as competent".
• Firms must "review on a regular and frequent basis employees' competence" (TC 2.1.12R). A framework makes each review comparable with the last.
• Guidance at TC 2.1.4G expects supervisors to have "the necessary coaching and assessment skills". A clear framework is what they assess against.

There is a Consumer Duty angle too. The FCA's Consumer Duty focus areas for advice and wealth include "Risks to providing unsuitable advice" and "Tackling poor identification of clients with characteristics of vulnerability by wealth managers". A framework that covers suitability and vulnerability explicitly gives the firm a way to evidence attention to both.

Step 1: choose the competencies

Start from the work advisers actually do, not from a generic list. For a retail investment and pensions adviser, a framework often covers areas such as:

Keep the list short enough to assess properly. A short list of well-defined competencies beats a long list of vague ones. Mark clearly which competencies come from the rules and which are the firm's own standards, so nobody confuses a house preference with a regulatory requirement.

Step 2: write levels that describe behaviour

Each competency needs levels that describe what the assessor will see or hear, not adjectives. "Good questioning" cannot be applied consistently. "Explores the client's objectives with open questions, probes answers and confirms them in the client's words" can.

A simple scale with a few levels is usually enough, for example: not yet demonstrated, developing, competent, strong. For each level, write one or two sentences of observable behaviour. The level that matters most is the competence line, because TC 2.1.3G expects clear criteria for the point at which an adviser is assessed as competent.

An example

For capacity for loss, an illustration of how levels might read:

• Not yet demonstrated: capacity for loss is not discussed, or is treated as the same as attitude to risk.
• Developing: discussed, but not linked to the client's actual finances.
• Competent: the client's ability to absorb falls in value is explored against their income, spending and other assets, and recorded.
• Strong: as competent, and the conclusion visibly shapes the recommendation.

Our guide to capacity for loss vs attitude to risk explains the distinction the framework is testing.

Step 3: say what counts as evidence

For each competency, list where the evidence comes from: recorded meetings, file reviews, suitability reports, observed sessions, technical tests. Then set a rule for what an assessment must contain, such as quoting the specific moment or passage that supports each rating. An assessment without evidence is an opinion.

Evidence should be drawn from a range of the adviser's work. A single strong meeting does not show the adviser is competent across different clients and types of advice.

Step 4: version and date the standard

Frameworks change. The rules change, the firm's services change, and assessors learn what does not work. If the framework is edited in place, nobody can later say which standard a past assessment was made under. That is a real problem when a competence decision is questioned.

Treat the framework like a policy document:

1. Give it a version number and an effective date.
2. Keep a short change log: what changed, why, and who approved it.
3. Record the version on every assessment.
4. Keep previous versions, rather than overwriting them.
5. Decide whether assessments in progress finish under the old version or move to the new one, and record the choice.

Records matter here. TC 3.1.1R requires firms to "make appropriate records to demonstrate compliance with the rules in this sourcebook". An assessment that names its standard is far easier to rely on.

Step 5: make assessors consistent

A written framework does not guarantee consistent marking. As good practice, a firm can:

• Calibrate. Have two assessors mark the same meeting independently, then compare and discuss differences.
• Use worked examples. Keep anonymised examples of each level for each competency.
• Review the outliers. Look at ratings that differ sharply from an adviser's usual pattern.
• Feed corrections back. When a rating is challenged and changed, capture the reasoning so the next assessment benefits.
• Review the framework itself. At least once a year, and whenever relevant rules change.

Running the framework without the spreadsheet

Where a framework lives in a spreadsheet, versioning and evidence are hard to keep straight. By our estimate, assessing one adviser competency by hand takes around ninety minutes.

Freeboard was built for this. Advisers are scored against defined skill profiles, the competencies the firm cares about, and the scoring ruleset is versioned and dated, so you can always say which version applied to an assessment. Every conclusion is backed by the client's own words, quoted from the meeting, and a learning loop means a score corrected once carries its reasoning forward. It runs off meetings the firm already records through Fireflies. The firm still owns the framework and the competence decision. For more on the assessment process itself, see adviser competency assessment without the spreadsheet.

Frequently asked questions

Does the FCA require a competency framework?

The TC sourcebook does not prescribe one. It does require firms to assess competence, review it regularly and frequently, and keep records, and guidance expects clear criteria for the point of competence. A written framework is the practical way to meet those requirements consistently.

How often should a competency framework be updated?

The rules do not set a frequency. In our view review it at least annually and whenever relevant rules or services change, recording each new version with its date.

Why does versioning a competency framework matter?

Without versions, nobody can say which standard a past assessment was made under. Recording the version on each assessment makes competence decisions explainable later.

To see Freeboard score an adviser against a versioned, dated standard, read about Freeboard or book a twenty-minute demo on Microsoft Teams with Adam Booth, run live on a demo firm with nothing to prepare.