New CPT Regime 2022

On 18 Jun 2021, SFC issued the Consultation Conclusions on Proposed Enhancements to the Competency Framework for Intermediaries and Individual Practitioners.  The revised Competence Guidelines, CPT Guidelines and Fit and Proper Guidelines will become effective on 1 Jan 2022.

As a compliance trainer, I am more keen on discussing the revised CPT requirements first.

Specifying 10 CPT hours per calendar year as the minimum requirement for LR, with two additional hours on regulatory compliance for RO

• This is a fundamental change of the CPT regime.  In the past, if you're licensed for multiple RA competence groups, your CPT obligation may amount to 15 or even 20 hours.  But of course, many SFC licensees have been smart enough to take CPT on topics relevant to different RA competence groups (for multiple counting).  So I think most of them have taken only 5 CPT hours every year.

• While RA competence group basis is no longer used, SFC straightly increases the minimum CPT requirement (per individual basis) to 10 hours (for LR) or 12 hours (for RO) per year.  This change would probably affect a lot of licensees as most of them should have "enjoyed" 5 hours over the past years.  But when comparing with the CPD regime of other regulated industries (e.g. insurance, lawyers, etc.), 10 or 12 hours is actually not excessive.
• Requiring RO to take 2 extra hours on regulatory compliance is also fair.  There are too many RO who are ignorant of regulatory requirements and over-relying on compliance officers to handle regulatory compliance.  SFC has also clarified that "regulatory compliance" is only a subset of "compliance".  When fulfilling this 2-hour requirement, RO should choose topics about SFC's rules and regulations.  Topics about compliance with internal company policies are not eligible (unless those policies are primarily originated from SFC's regulations).

Requiring each individual practitioner to attend at least five CPT hours on topics directly relevant to the RAs in which he or she engages

• In other words, a LR can feel free to attend 5 hours on topics which are relevant to CPT but not necessarily relevant to his licensed RA.  This seems to be SFC's response to a long-term problem encountered by licensees: too difficult to identify adequate trainings relevant to their licensed RA.
• SFC emphasizes that such CPT hours should be allocated to cover an individual's practice areas in proportion to the time and effort that he spends in each area.  The allocation is not an easy matter to administer.  For example, a LR is licensed for both RA1 and RA2, assuming he allocates 60% of his time to RA1 and 40% to RA2.  It follows that out of the 5 CPT hours on "directly relevant to RA" topics, 3 hours should cover RA1 and 2 hours should cover RA2.  The problem is...WHO (the LR himself, his supervisor, HR...?) is responsible for formally defining the LR's allocation of time and effort among different RA?  Even SFC has admitted that it doesn't intend to require any precise calculation of the time and effort an individual spends during the year on different RA.  My practical suggestion is...trying to identify CPT on topics covering as many RA as possible.

Requiring each individual practitioner to complete no less than two CPT hours on topics relating to ethics or compliance per calendar year

• This is reasonable.  Spending 20% of the 10 CPT hours on ethics or compliance topics (even they are not directly relevant to RA one is licensed for) is good for fostering compliance culture.

Requiring each individual practitioner who first joins the industry in Hong Kong to complete two CPT hours on ethics within 12 months

• From 2022 onwards, first time SFC licensee must take 2 CPT hours on ethics for "brainwashing" purpose.  In subsequent years he will be required to take 2 CPT hours on either ethics or compliance (see above).  That means, SFC considers that ethics precedes compliance.
• However, ethics training is not widely available in the market due to lack of commercial value.  Thus SFC suggests organizing in-house trainings or using the free training service offered by ICAC's Community Relations Department.

Other issues

• SFC has clarified in the revised CPT Guidelines that CPT in both face-to-face and virtual formats are acceptable.  In fact, due to the pandemic, many CPT courses are now delivered via online platform.  But I still think webinar is not eligible for CPT purpose because usually the host is unable to provide the attendance record.
• The revised CPT Guidelines has also widened the scope of relevant CPT topics to include: market developments, Fintech, ESG, cybersecurity and IT (which is actually replacing "computer knowledge").  These topics are suitable for fulfilling the "non-core" CPT hours (i.e. not directly relevant to RA one is licensed for).

Ad time: I am going to launch the SFC Compliance Series 2021 by collaborating with KORNERSTONE.  In these new CPT sessions, I would share my practical experience in handling the following compliance topics:

• Module 1 – Licensing Issues, Complaint Handling and Dealing with SFC
• Module 2 – AML and Combating Financial Crimes and Frauds