FCA Training and Competence: TC Requirements for Small Firms

The FCA expects everyone who performs a regulated role to be — and to remain — competent to do it. For firms carrying out certain retail activities, this expectation is formalised in the Training and Competence (TC) sourcebook. For a small firm, getting T&C right is not just a compliance box: it is the mechanism by which you demonstrate that your advisers and staff are qualified, supervised, and kept up to date.

This guide explains what the FCA's training and competence requirements involve, which firms and roles the TC sourcebook applies to, and how T&C fits alongside the Senior Managers and Certification Regime — a connection that sharpened when the conduct-rules scope expanded on 1 September 2026.

What is the TC sourcebook?

The Training and Competence sourcebook (TC) is the part of the FCA Handbook that sets specific competence and qualification requirements for individuals carrying out certain retail activities — most notably giving advice on retail investments, mortgages, and some insurance products. Where TC applies, it requires firms to:

Assess competence before an individual carries out the activity unsupervised.
Ensure the individual attains an appropriate qualification where the activity requires one.
Supervise the individual to a degree proportionate to their competence.
Maintain competence on an ongoing basis, including keeping knowledge and skills up to date.
Keep records of training, competence assessments, and qualifications.

TC sits within the wider systems-and-controls framework (SYSC), which requires firms more generally to employ personnel with the skills, knowledge and expertise necessary for their responsibilities. So even firms whose specific activities fall outside the detailed TC rules still have a broader competence obligation under SYSC.

Which firms and roles does TC apply to?

The detailed TC rules apply to individuals carrying out specified retail activities. The clearest example is a person giving investment advice to retail clients — they fall squarely within TC, must hold an appropriate qualification, and must be assessed as competent.

Not every regulated role is caught by the detailed TC rules. A firm doing only wholesale business, or activities outside the TC-specified list, may not be subject to the qualification requirements — but it will still be subject to the general SYSC competence obligation and, under SMCR, to the fitness-and-propriety requirement that everyone is competent and capable.

The practical approach for a small firm is:

Identify the regulated activities your staff perform.
Check whether those activities fall within the detailed TC rules (retail investment advice, mortgage advice, and certain other retail activities do).
For TC-caught roles, confirm qualifications, run competence assessments, and set supervision proportionate to competence.
For all regulated roles, satisfy the general SYSC/SMCR competence obligation.

Competence assessment and the "competent" bar

For TC-caught roles, an individual cannot carry out the activity unsupervised until the firm has assessed them as competent. Competence is not a one-off qualification — it combines the required qualification with demonstrated ability to apply it. A newly-qualified adviser is qualified but may not yet be competent; the firm supervises them more closely until it has assessed them as competent to act unsupervised.

Once competent, the individual's competence must be maintained. This means keeping technical knowledge current (relevant to continuing professional development), reassessing on triggers such as a change of role or a period away, and documenting all of it. A competence assessment that was done once at hire and never revisited does not meet the maintaining-competence obligation.

How T&C connects to SMCR

Training and competence is not a standalone regime — it interlocks with the Senior Managers and Certification Regime at several points:

Fitness and propriety. One of the three elements of the F&P assessment is competence and capability. For certified staff, the firm's annual F&P assessment draws directly on its T&C records — you cannot certify someone as fit and proper if you cannot evidence their competence. Our fitness and propriety guide covers how the assessment works.
Certification functions. Several certification functions — notably those "requiring qualifications" — map directly onto the TC rules. The person who must be certified is often the same person the TC sourcebook requires to be qualified and competent.
Conduct rules training. Everyone subject to the conduct rules must be trained on how the rules apply to their role. This is a distinct obligation from TC competence, but the two run together in practice — a firm's training programme usually covers both. Our conduct rules training guide covers that requirement.

From 1 September 2026, the PS25/23 non-financial misconduct rules extend the conduct rules' reach in how serious non-financial misconduct is treated across the SMCR population. That makes it more important than ever that a firm can evidence its people are trained, competent, and supervised — competence and conduct are assessed together, not in separate silos.

What small firms should keep

A proportionate T&C framework for a small firm produces and retains:

Qualification records for each TC-caught role.
Competence assessments — the initial assessment before unsupervised activity, plus ongoing reassessments.
A supervision record showing the level of supervision applied and how it reduced as competence was established.
CPD / continuing-competence records demonstrating knowledge is kept current.
Conduct rules training records (linked to, but distinct from, competence).

These records feed the annual F&P assessment and are exactly what a supervisor or skilled-person review will ask to see. As with the rest of SMCR, records you cannot produce are treated as obligations you have not met.

Common mistakes

1. Assuming TC does not apply because the firm is small. Firm size is irrelevant — what matters is the activities performed. A one-adviser firm giving retail investment advice is fully within TC.

2. Treating competence as a one-off. Competence must be maintained and reassessed, not assessed once at hire.

3. Confusing conduct rules training with T&C competence. They are related but distinct obligations — a firm needs both.

4. Not linking T&C to the F&P assessment. The competence element of fitness and propriety draws on T&C records; keeping them disconnected creates gaps at certification time.

Summary

The FCA's TC sourcebook sets qualification, competence-assessment, supervision and record-keeping requirements for individuals performing specified retail activities.
Firm size is irrelevant — what matters is the activity; retail investment and mortgage advice are squarely within TC.
Competence must be assessed before unsupervised activity and maintained thereafter, with records retained.
Even firms outside the detailed TC rules face a general SYSC/SMCR competence obligation.
T&C interlocks with SMCR: the competence element of fitness and propriety draws directly on T&C records, and the connection tightened when the conduct rules expanded on 1 September 2026.

Last reviewed: 3 September 2026. This guide explains the FCA's training and competence requirements for small regulated firms. It is general information, not regulatory or legal advice, and it does not describe a ConductLog product feature — ConductLog is validating demand for a tool that helps small FCA-regulated firms handle conduct and misconduct processes. For your firm's specific obligations, check the FCA Handbook and consider professional advice.