E-learning and LMS blog articles

When the Financial Conduct Authority (FCA) pays a visit, even confident firms find themselves exposed. Some businesses, despite believing they are effectively managing compliance and boast a robust compliance training programme, can be caught off guard, not by drastic findings such as fraud or misconduct, but by something often hidden in plain sight: training gaps.

This systemic issue is a surprisingly common failure that the FCA has unearthed during audits. In this blog, we’ll explore why FCA audits are so effective at exposing overlooked gaps in employee training, where firms fall short, and our top tips on proactively closing training gaps with an LMS (before they show up on your audit report).

Who are the FCA?

The Financial Conduct Authority (FCA) is the UK’s primary financial regulatory body, operating independently of the UK government.

It’s their responsibility to protect consumers, ensure market integrity and promote competition. They’re also responsible for identifying compliance breaches, for which they can impose fines, bans, and operational restrictions.

Who do they audit?

The FCA regulates firms such as banks, insurance companies, and pension providers. They can audit any regulated firm, and part of the process is looking at compliance training and competence.

Why do FCA audits reveal hidden training gaps?

When tracking evidence of compliance, many organisations will turn to spreadsheets or outdated training systems, but the FCA digs deeper, often going into granular detail.

FCA audits look to assess the competency of individual employees. They’re not just looking for evidence that training has happened; they’re looking to determine whether employees understand and are competent enough to put what they’ve learned into practice.

Rather than simply focusing on surface-level indicators of compliance (such as completion rates and policy documentation), the FCA will look at whether a company demonstrates a culture of compliance, accountability and ethical behaviour.

When carrying out an audit, FCA auditors bring an external, independent perspective, enabling them to spot issues, systemic weaknesses, and inconsistencies that internal teams may miss.

To better understand this, let’s explore some common examples of where firms fall short and how the FCA identifies these failings.

Where do companies fall short? Exploring real-world examples of common compliance failures

Taking the ‘tick-box’ approach to compliance

One of the biggest mistakes companies can make when approaching compliance management is to treat it as a ‘tick-box’ exercise. This approach sees compliance training as a formality by which training simply needs to be assigned, completed and recorded. Here, companies fall short as they fail to ensure that employees have actually retained and understood the material and feel confident enough to apply it in their roles.

To identify knowledge and competency gaps caused by this ‘superficial’ compliance training approach, the FCA may give employees a fictional scenario and ask them what they would do in the situation. If the answer doesn’t align with compliance protocol and regulations, it signals to the FCA that a company hasn’t achieved real compliance competency.

One-size-fits-all compliance training

A personalised training approach is essential for the success of any learning and development (L&D) program, including compliance training. However, many organisations still choose a one-size-fits-all model for compliance training, prioritising speed and cost-efficiency in the short term. Unfortunately, when audits reveal major compliance failures, the cost of tailoring training suddenly seems minimal compared to the potential fines and penalties.

When it comes to the expectations of the FCA, generic training is not enough. Different roles have different risks, and role-specific training plans allow you to align these risks with the relevant role.

Outdated training

Regulations, policies, and internal processes are continuously evolving; however, more often than not, compliance training doesn’t reflect the latest changes. This is particularly true for organisations using ineffective training methods, such as paper-based documents, because updating training requires a great deal of time and effort. As a result, training quickly becomes outdated and no longer reflects current FCA guidance.

Ineffective record-keeping and monitoring

A lack of robust systems to monitor compliance training, maintain audit trails, and access accurate records is seen by the FCA as a significant red flag. This is because the FCA requires firms to regularly review the effectiveness of training, analyse data, assess employee competence and take action when gaps are identified.

When relying on spreadsheets or paper-based training, it’s easy to miss training expirations, recertifications, incomplete learning, and role changes, all of which can drastically widen training gaps.

How an LMS can help close training gaps before they’re flagged during an audit

For organisations looking to create a culture of compliance and avoid FCA penalties, manual tracking, outdated systems, and generic training simply don’t cut it. Here’s how an LMS such as our Totara Learn platform can help:

Automated compliance tracking – Automated training notifications, real-time reports, and instantly exportable audit trails make it easy to monitor compliance progress.

Build role-specific training plans and pathways aligned to FCA regulations – Say goodbye to generic training. With an LMS, you can create and assign tailored learning based on specific training needs, ensuring each employee gets the right training for them.

Provide evidence of completion and competence – Thanks to features such as LMS assessments and competency frameworks, you can easily track genuine understanding and competency along with training completion.

Diversify content – Boost engagement, retention, and competency by utilising a variety of content types using your LMS. Content such as scenario-based lessons makes for more meaningful and memorable compliance training. What’s more, an LMS makes it easy to update course material with the latest regulations.

Cultivate a culture of continuous learning – With an LMS, you can go beyond the annual tick-box style training approach by delivering ongoing learning opportunities. Deliver knowledge refreshers with microlessons and create learning libraries for round-the-clock access to key compliance materials.

Get audit-ready with Hubken

By implementing a powerful LMS such as our Totara solution, you’re better positioned to build a proactive compliance management strategy. Identify training gaps before the FCA and build a stronger compliance culture throughout your organisation.

Get in touch with us today if you’d like to find out more about our award-winning Totara and Moodle LMS solutions.