Assessment of clinical skills in addition to factual knowledge has become part of the examination system in both undergraduate and postgraduate examinations. There is an increasing interest in the concept of competence and how it can be measured, particularly for the process of revalidation of practitioners. The Objective Structured Clinical Examination (OSCE) has been introduced for the assessment of clinical skills into postgraduate anaesthetic examinations in the United Kingdom. As with any examination, the issues regarding setting a standard are under continual review. The application of this exam format to the measurement of competency as well as skills has been the subject of scrutiny during the period reviewed. The literature suggests that competence is a much more complex construct than skill and that OSCE exams will be a contributory part but more work is required to establish assessment methods which will produce a global rating of competence. The role of the OSCE format in education as well as assessment has been examined and it is suggested that formative assessment can be made, and peer review learning brought about using an OSCE performed in teams.