Supervising new advisers: the TC rules and what to check
A practical guide to supervising new advisers under the FCA's TC rules: supervision until competent, who can supervise, the 48 month qualification limit, what to check and the evidence to keep.
On this page
- What the TC rules require when supervising new advisers
- Three stages of supervision
- Before competence
- The point of competence
- After competence
- What a supervisor should check
- In client meetings
- In files and reports
- In the adviser's development
- The supervisor matters as much as the supervision
- The evidence to keep
- Making supervision sustainable
- Frequently asked questions
- How long does a new adviser have to qualify?
- Who can supervise a new adviser?
- Is file checking enough supervision?
A new adviser's first year is when the firm carries the most risk and has the least evidence. The adviser is learning, the supervisor is busy with their own clients, and supervision drifts into a quick check of the suitability report before it goes out. When someone later asks how the firm decided the adviser was competent, the answer is often a signature and a date.
Supervising new advisers well is a regulatory requirement, not only good management. This guide sets out what the FCA's Training and Competence sourcebook (TC) requires, how supervision should change as the adviser develops, what a supervisor should check, and the evidence worth keeping.
What the TC rules require when supervising new advisers
The core requirements, quoted from TC 2.1 and TC 2.2A:
| Reference | Type | What it says |
|---|---|---|
| TC 2.1.2R | Rule | "A firm must not allow an employee to carry on an activity in TC Appendix 1 without appropriate supervision." |
| TC 2.1.3G | Guidance | "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" |
| TC 2.1.4G | Guidance | Supervisors should have "the necessary coaching and assessment skills as well as technical knowledge and experience to act as a competent supervisor and assessor" |
| TC 2.1.5R(1) | Rule | Where a not-yet-competent employee gives personal recommendations on retail investment products to retail clients, "the firm must ensure that the individual supervising and assessing that employee has attained an appropriate qualification" |
| TC 2.1.1R | Rule | The firm must not assess an employee as competent until they have "demonstrated the necessary competence" |
| TC 2.2A.1R | Rule | "a firm must ensure that the employee attains an appropriate qualification within 48 months of starting to carry on that activity", and "must record the date on which the employee starts to carry on that activity." |
The R and G markers matter. Rules are binding. Guidance explains how the FCA expects the rules to work and is a strong indication of what a supervisor will be asked about, but it does not carry the same force.
One sentence on the FCA's training and competence page is worth pinning above every supervisor's desk: "We do not expect supervision to only involve file checking."
Three stages of supervision
TC 2.1.3G makes clear that supervision changes over time. A simple way to plan it is in three stages.
Before competence
Supervision is at its most intensive. In practice this can mean checking advice before it reaches the client, reviewing meetings regularly and holding frequent one-to-one sessions. The exact arrangements are for the firm to set, but they should be visibly more intensive than for a competent adviser, and written down.
The point of competence
TC 2.1.3G also says firms should have "clear criteria and procedures relating to the specific point at which the employee is assessed as competent". That means deciding in advance what the adviser must demonstrate, over what range of advice and clients, and who signs it off. A sign-off without criteria is hard to defend.
After competence
Supervision continues, at a lighter level, and the firm must still "review on a regular and frequent basis employees' competence" (TC 2.1.12R). A firm might reduce pre-checking but keep regular meeting and file reviews.
What a supervisor should check
Because supervision should not only involve file checking, a sound programme looks at the whole of the adviser's work. A checklist to adapt:
In client meetings
- Did the adviser gather the client's knowledge and experience, financial situation including ability to bear losses, and objectives including risk tolerance, as COBS 9A.2.1R requires?
- Were attitude to risk and capacity for loss explored separately and in the client's own words?
- Were any characteristics of vulnerability noticed and responded to?
- Did the adviser explain clearly and check understanding?
- Were charges and the nature of any ongoing service explained?
In files and reports
- Does the suitability report specify the client's demands and needs, explain why the recommendation is suitable, and explain any possible disadvantages (COBS 9.4.7R)?
- Does the recommendation follow from the facts gathered?
- Are charges disclosed and agreed as COBS 6.1A requires?
- Is the file complete and orderly?
In the adviser's development
- Progress towards an appropriate qualification against the 48 month limit, from the recorded start date.
- CPD planned and logged against the gaps found.
- Focus areas from the last supervision session, and whether they improved.
Our compliance file review checklist goes into the file side in detail.
The supervisor matters as much as the supervision
TC 2.1.4G asks for supervisors with coaching and assessment skills as well as technical knowledge. It can be tempting to appoint the most senior adviser by default. A better test is whether that person has the time, the qualification required by TC 2.1.5R(1) where it applies, and the ability to give specific, evidence-based feedback. Record why each supervisor was judged suitable.
It also helps to keep two roles clear in the new adviser's mind: coaching, which develops them, and assessment, which decides whether they meet the standard. Our guide to training and competence for financial advisers covers the assessment side, including CPD and the Statement of Professional Standing.
The evidence to keep
A supervision file that stands up usually holds:
- The date the adviser started the activity, as TC 2.2A.1R requires.
- The supervisor's name, their qualification and why they were judged suitable.
- The supervision arrangements, showing how they are more intensive before competence.
- Records of each meeting review and file check, with findings and actions.
- The written criteria for the point of competence, with the version that applied.
- The competence assessment and sign-off, with the evidence behind it.
- Qualification progress and CPD records.
TC 3.1.1R requires firms to "make appropriate records to demonstrate compliance with the rules in this sourcebook" and keep them for set periods after an employee stops carrying on the activity. Separately, TC 2.1.31R requires the FCA to be notified "as soon as reasonably practicable" of significant events, such as an adviser no longer being competent.
Making supervision sustainable
The difficulty is time. By our estimate, assessing one adviser competency by hand takes around ninety minutes, and reviewing one client meeting about an hour. Intensive early supervision multiplies both.
Freeboard runs off the meetings the firm already records, keeping a meeting library in sync with Fireflies. It scores advisers against defined skill profiles and a versioned, dated standard, so each assessment shows which version applied. Attitude to risk, capacity for loss, knowledge and understanding and vulnerability are assessed separately, with confidence, decision readiness and evidence completeness alongside, and every conclusion is quoted from the client's own words. It is built to support a structured T&C scheme. It does not supervise or sign anyone off: the supervisor reviews the evidence and makes the judgement.
Frequently asked questions
How long does a new adviser have to qualify?
TC 2.2A.1R requires the firm to ensure the employee "attains an appropriate qualification within 48 months of starting to carry on that activity", and to record the start date.
Who can supervise a new adviser?
Where a not-yet-competent adviser gives personal recommendations on retail investment products to retail clients, the supervisor and assessor must have "attained an appropriate qualification" (TC 2.1.5R(1)). Guidance also expects coaching and assessment skills alongside technical knowledge.
Is file checking enough supervision?
No. The FCA says: "We do not expect supervision to only involve file checking." Meetings, development and the adviser's wider conduct should be part of it.
To see Freeboard assess an adviser against a dated standard from recorded meetings, 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.
