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1. There is an FSA mandatory training requirement on even the most competent convertibles fund manager. The FSA Handbook requires, in Principle 3, that regulated firms take reasonable care to organise and control their affairs responsibly and effectively. This includes making proper arrangements for any employee associated with a regulated activity carried on by the firm to achieve, maintain and enhance competence.
2. There is an implied requirement for appropriate control of prospectus risk. Principle 3 is amplified in SYSC. TC1.1.4 states that A firm must take reasonable care to establish and maintain such systems and controls as are appropriate to its business (SYSC 3.1.1 R) SYSC 3.1.1 R. Specifically, the systems and controls of a firm should enable it to satisfy itself of the suitability of anyone who acts for it (SYSC 3.2.13 G) SYSC 3.2.13 G. This would include the competence of the individual for the role.
3. Distance learning by the receipt of CONV.BIZ prospectus audits ( TC 1.1.3) may satisfy the mandatory obligations, without talking the individual from his trading desk. Convertibles fund managers do not have to leave their desks. Distance learning is permitted (FSA/PN/120/1999).
4. CONV.BIZ prospectus audits can be delivered in a manner which simultaneously fulfils training requirements with minimal disruption to the business. Under TC 2.3.1.(2) a regulated firm must ensure that training is timely, planned, appropriately structured and evaluated:-
Timeliness: The CONV.BIZ audits examine current prospectuses for potential risks and rewards which may be relevant in the future.
Planned: The output is planned on the basis of 100 prospectus audits delivered over the space of a year.
Appropriately structured: The service is structured so that most of the convertibles audited are in Europe or South Africa. The structured training allows for flexibility.
Evaluated: CONV.BIZ will offer subscribers on a flexible basis suggestions as to how each audit may be evaluated on the satisfaction of control of prospectus risk. Members of the CONV.BIZ team will also seek to have a regular dialogue to evaluate the impact of the service.
Taking the CONV.BIZ audits kills several birds with one stone. Due diligence can be done on a portfolio; a firm can show to the FSA that the training budget is being properly spent; traders are not hauled off their desks for disruptive off-site training. Note that there is a general principle that research can be softed but training cannot. If a fund manager decides NOT to soft, then it should look at whether the training budget can help pay for the service. CONV.BIZ is able to offer additional training if necessary.
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