Decoding COFI: Outcomes-based regulation – How ready is your staff?

You’ve reviewed your systems and processes to ensure your FSP complies with the proposed outcomes-based regulations and Omni-CBR (Conduct of Business Return) data requirements – but is your staff prepared for the impact of these upcoming changes?

This article explores the importance of staff training and why it’s crucial for employees to understand how their roles contribute to the FSP’s success in a conduct-focused regulatory environment. Additionally, we provide tips on equipping your employees with the skills and knowledge they need to confidently navigate the upcoming regulatory changes.

The most advanced data capturing or client management system will mean little if your staff is not properly trained to use it. Do they know how to operate the new systems and understand what data needs to be captured? Are they aware of the importance of that same data in the context of measuring Treating Customers Fairly (TCF) Outcomes and how they can promote and improve these outcomes within the business?

FSPs that take proactive steps to train their staff now will benefit greatly. Effective training will help your team understand their changing roles and how they can participate meaningfully. Moreover, by adopting a phased approach to their new responsibilities, they can maintain their existing service and support levels and continue to play their part it driving business performance.

How your business will benefit from effective staff training

The Conduct of Financial Institutions (COFI) Bill and Omni-CBR will bring a greater focus on fostering TCF in the financial services sector and require FSPs to collect and report on data to improve customer outcomes. The benefits of using technology and tools to enhance data collection and risk management are clear: FSPs that can use these tools to improve their view of performance and results, focusing on customer outcomes, will be a step ahead of those who don’t, regardless of when COFI and the delayed Omni-CBR come into effect.

However, advanced tools and business processes mean little without proper and ongoing staff training as employees may not fully understand how the changed business approach relates to TCF, how their roles will change or how to operate the new systems and tools. This can lead to inefficiencies, inadequate data, increased costs, compliance gaps and even potential regulatory sanctions.

Crucially, a one-size-fits-all approach to training won’t suffice. Training programmes should be customised to the specific needs of the business concerning existing regulations, like the FAIS Act, the impact of future regulations, like COFI and Omni-CBR, and the particular roles and responsibilities of employees as they evolve under the new legislation.

Outcomes-based regulation focuses on TCF Outcomes and ensuring that financial products and services meet client needs. All staff must be well-versed in the TCF Outcomes and how they can promote these principles in the business, client relations, handling complaints efficiently and maintaining high standards of customer service.

Common training pitfalls to avoid:

1. Generic training programmes: One-size-fits-all training sessions do not cater to the specific needs of distinct roles within the organisation. Tailored training programmes that address the unique responsibilities of various staff members are crucial.
2. Neglecting administrative staff: Training should not be limited to client-facing roles and management. Administrative staff play a critical role in data management and compliance reporting. Neglecting their training can lead to inaccuracies and inefficiencies.
3. Procrastination: Delaying training until the regulatory deadlines approach can result in rushed, ineffective programmes. Early and continuous training ensures a smoother transition and better preparedness.
4. Insufficient practical training: Theoretical knowledge alone is not enough. Practical, hands-on training that simulates real-world scenarios is essential for effective learning and application.

Tips for effective staff training

1. Start early: Initially, Omni-CBR was expected to kick off in 2024 with a two-year transitional period. Full implementation was scheduled for 2026, but the timeline has been delayed. The enactment date for COFI also hasn’t been confirmed. Still, this doesn’t mean you should delay training. Beginning staff training now provides ample time for employees to absorb and apply new knowledge, reducing the risk of last-minute scrambling. Early training allows for a staggered schedule, enabling staff to train in groups at separate times, thus minimising business disruption. It also helps staff to better handle initial teething problems when the new regulations are implemented.
2. Role-specific training: Customise training programmes to address the specific responsibilities of different roles. For example, if your administrative staff is responsible for recordkeeping, their training should focus on the data-capturing systems and what data needs to be collected. This will enable them to spot missing information, such as a Representative forgetting to add the client’s age on a new client form. If your management team is responsible for root cause analysis, ensure they know how to analyse data effectively. When clients contact the FSP with a complaint, the first person they speak to should be trained on handling complaints and managing difficult conversations. Does everyone in the business know the six TCF Outcomes and how their actions can foster a culture of TCF?
3. Practical exercises: Incorporate practical exercises and simulations into training sessions. Real-world scenarios help staff understand how to apply their knowledge effectively.
4. Continuous learning: Make training an ongoing process rather than a one-time event. Regular refresher courses and updates on regulatory changes keep staff informed and competent.
5. Utilise external expertise: Partner with compliance experts or training providers like Masthead to ensure high-quality, comprehensive training programmes. External experts can provide insights and guidance tailored to your organisation’s needs.
6. Leadership involvement: Senior management should lead by example and participate in training sessions. Their involvement underscores the importance of proper training and motivates staff to take training seriously.

Give your staff the tools they need to succeed

By addressing common training pitfalls and implementing effective training strategies, FSPs can navigate the changing regulatory landscape with confidence.

Early, role-specific and practical training programmes, supported by continuous learning and external expertise, will prepare staff to meet the challenges and opportunities presented by these new regulations.