Retail Distribution Review

Written evidence submitted by Unite the Union

This response is submitted by Unite the Union. Unite is the UK’s largest trade union with 1.5 million members across the private and public sectors. The union’s members work in a range of industries including financial services, manufacturing, print, media, construction, transport, local government, education, health and not for profit sectors.

Unite is the largest trade union in the finance sector representing some 150,000 workers in all grades and all occupations, not only in the major English and Scottish banks, but also in investment banks, the Bank of England, insurance companies, building societies, finance houses and business services companies.

Executive Summary

· Any legal requirement for increased levels of skills and knowledge should be agreed by the company in conjunction with appropriate individuals through constructive dialogue;

· Employers should act fairly when dealing with individuals who may find this transition difficult;

· Unite is concerned about businesses that are failing to engage with their workforce or representatives on how best to approach and deliver the proposals;

· Suitable resources including financial support, study time and target adjustments should be put in place to ensure individuals are able to obtain the necessary qualification;

· Unite recommends that the deadline date should be less rigid to provide for a staggered timescale to complete the qualification;

· Employers should undertake to consult fully with trade unions and employee representatives in the formulation of their policy on this issue.

Introduction

1. Unite welcomes the opportunity to respond to the Treasury Committee call for evidence which seeks to address specific points relating to the Retail Distribution Review (RDR) including transparency, the qualification framework and clarity in advice and whether the RDR will deliver these outcomes or whether the outcomes could be achieved in some other way.

2. Unite sees continual professional development as a cornerstone of good corporate behaviour and economic success. When this is combined with the requirements included in the RDR for improved skills and competency levels, improved transparency and robust ethical conduct as well as effective monitoring and robust regulation, it puts the financial services sector in a strong position to rebuild some of the trust that has been lost in recent times.

3. Unite stated in response to the FSA consultation: Delivering the RDR, [1] that it welcomed the enhanced supervision and enforcement proposals put forward in the new professional standards and suggested that while recognising the need to reform professional qualifications, it is important not to lose sight of the impact such up-skilling will have on the workforce through increased studying on top of an existing workload.

4. It is therefore vital that any legal requirement for increased levels of skills and knowledge should be agreed by the company in conjunction with appropriate individuals through constructive dialogue. Evidence shows that continued professional development increases confidence and enhances morale which benefits the individual and the business and is likely to improve consumers’ confidence in the advice they receive, improve service provision and rebuild positive perceptions of the sector overall.

5. However, while Unite recognises the necessity to reform professional qualifications we remain mindful of the impact such up-skilling will have on the workforce who will be required to reach the necessary standard within a specific timeframe.

6. Unite previously called on the FSA to ensure that employers act fairly when dealing with individuals who may find this transition difficult and ensure that sufficient support is made available to ensure that individuals are assisted wherever possible to obtain the qualification.

7. Unite also raised concerns regarding individuals who may find it difficult to achieve the new standard within the timeframe who may then find themselves involved in the disciplinary process on grounds of capability and are then managed out of the company without being given sufficient opportunity to meet the changing needs of the industry within the timescales set.

8. Unite acknowledges that some firms are approaching the challenges posed by RDR very positively and fully engaging with trade unions to ensure that sufficient support is available to colleagues to reach the necessary standard required by the deadline date. However, Unite remains concerned about individuals that are employed in businesses that are failing to engage with their workforce or representatives on how best to approach and deliver the proposals.

9. It is important that suitable resources including financial support, study time and target adjustments are put in place to ensure individuals are able to obtain the necessary qualification. Unite is aware of specific concerns among members who feel considerable pressure being placed upon them even at this stage despite the date for implementation being two years from now. [2] One organisation in the sector has stated that failure to attain the required qualification will result in the individual being removed from their role.

10. Unite sees this as an unacceptable pressure on individuals and would recommend that the deadline date should be less rigid to provide for a staggered timescale to complete the qualification and that in circumstances where completion remains unlikely that suitable mutually agreed alternative redeployment opportunities are put in place to alleviate the pressure on the individual.

11. Unite would be keen to find out what options are being made available to employees in the event that an individual declines to undertake the qualifications or fails one of the modules. Unite believes that re-deployment to a non-regulated role should be made an option in the first instance. Formal redeployment should also only become an option from 1st January 2013 as Unite would not expect individuals to opt on to the formal redeployment process/notice period until after all informal redeployment opportunities are exhausted.

12. Unite has also had concerns raised by members regarding the possibility that those individuals who are suitably qualified by the set timescale will face increased workload pressures through having to oversee the work of under-qualified colleagues. This will work against the fundamental principles of the RDR and may indeed lead to Treating Customers Fairly (TCF) principles being compromised.

13. There is also an added concern that employers may seek to pre-empt the de-authorisation date of 1st January 2013 of those regulated staff who have been unable to attain the relevant qualifications under RDR, with employers issuing an individual notice of dismissal on 1st October 2012 on the grounds of capability with no redundancy pay or later where length of service does not attract the full statutory or contractual notice period.

14. Unite believes that with costs increasingly under scrutiny, this route may be taken by some companies to avoid making redundancy payments to workers, and one which Unite would regard as fundamentally unfair given that until the 1st January 2013 all advisors without the necessary qualifications are still deemed completely compliant to undertake the role by the FSA. Unite would hope that employers undertake to consult fully with trade unions and employee representatives in the formulation of their policy on this issue.

15. Unite recognises that employers are faced with a range of competing factors surrounding implementing the RDR successfully. However there is a clear benefit to effective implementation gained through engaging positively with the workforce and their representatives.

January 2011