Fit and Proper Checks (SMCR)
The Financial Services Register (Register) provides a public record of the firms the Financial Conduct Authority regulates and the individuals that the FCA and the Prudential Regulation Authority have approved.
Publishing this information meets the FCA’s obligations under the Financial Services and Markets Act 2000 (FSMA).
The Register will continue following the extension of the Senior Managers and Certification Regime (SMCR) but will contain fewer individuals. This is because only individuals for specified Senior Manager roles at FSMA firms will then be approved and so appear on the Register.
These changes affect all relevant individuals who carry out work on behalf of almost every FCA-regulated financial services firm. Specifically:
- banks, building societies, credit unions and PRA designated investment firms (banking firms) including EEA and third country branches
- insurers and re-insurers
- all other firms authorised to provide financial services under FSMA; including limited permission consumer credit firms, such as not-for-profit debt advice bodies and credit unions
- appointed representatives (ARs) acting as agent for FCA authorised firms
Banking Firms and Insurers started submitting data during September 2019. However, all other FCA regulated firms will need to start submitting data as of 9 December 2019.
FIT & PROPER CHECKS
Under the SMCR, firms have 12 months from when the regime commences to certify relevant employees. In line with this, the FCA proposed that firms update the Directory after having certified those employees as fit and proper, or for other individuals, having otherwise assessed their suitability as applicable.
The FCA sets a number of factors when assessing the fitness and propriety of a person to perform a particular controlled function, to include honesty, integrity, reputation, competence and financial soundness.
HONESTY, INTEGRITY AND REPUTATION
The FCA regulated firm must consider, implement and assess whether the person:
(1) has been convicted of any criminal offence; this must include, where provided for by the Rehabilitation Exceptions Orders to the Rehabilitation of Offenders Act 1974 or the Rehabilitation of Offenders (Northern Ireland) Order 1978 (as applicable), any spent convictions; particular consideration will be given to offences of dishonesty, fraud, financial crime or an offence under legislation relating to companies, building societies, industrial and provident societies, credit unions, friendly societies, banking, other financial services, insolvency, consumer credit companies, insurance, consumer protection, money laundering, market manipulation and insider dealing, whether or not in the United Kingdom;
(2) has been the subject of any adverse finding or any settlement in civil proceedings, particularly in connection with investment or other financial business, misconduct, fraud or the formation or management of a body corporate;
(3) has been the subject of, or interviewed in the course of, any existing or previous investigation or disciplinary proceedings, by the appropriate regulator, by other regulatory authorities (including a previous regulator), clearing houses and exchanges, professional bodies, or government bodies or agencies;
(4) is or has been the subject of any proceedings of a disciplinary or criminal nature, or has been notified of any potential proceedings or of any investigation which might lead to those proceedings;
(5) has contravened any of the requirements and standards of the regulatory system or the equivalent standards or requirements of other regulatory authorities (including a previous regulator), clearing houses and exchanges, professional bodies, or government bodies or agencies;
(6) has been the subject of any justified complaint relating to regulated activities;
(7) has been involved with a company, partnership or other organisation that has been refused registration, authorisation, membership or a licence to carry out a trade, business or profession, or has had that registration, authorisation, membership or licence revoked, withdrawn or terminated, or has been expelled by a regulatory or government body;
(8) as a result of the removal of the relevant licence, registration or other authority, the person has been refused the right to carry on a trade, business or profession requiring a licence, registration or other authority;
(9) has been a director, partner, or concerned in the management, of a business that has gone into insolvency, liquidation or administration while the person has been connected with that organisation or within one year of that connection;
(10) or any business with which the person has been involved, has been investigated, disciplined, censured or suspended or criticised by a regulatory or professional body, a court or Tribunal, whether publicly or privately;
(11) has been dismissed, or asked to resign and resigned, from employment or from a position of trust, fiduciary appointment or similar;
(12) has ever been disqualified from acting as a director or disqualified from acting in any managerial capacity;
(13) in the past, the person has been candid and truthful in all their dealings with any regulatory body and whether the person demonstrates a readiness and willingness to comply with the requirements and standards of the regulatory system and with other legal, regulatory and professional requirements and standards.
The FCA regulated firm must consider, implement and assess whether:
(1) the person has been the subject of any judgement debt or award, in the United Kingdom or elsewhere, that remains outstanding or was not satisfied within a reasonable period;
(2) in the United Kingdom or elsewhere, the person has made any arrangements with their creditors, filed for bankruptcy, had a bankruptcy petition served on them, been adjudged bankrupt, been the subject of a bankruptcy restrictions order (including an interim bankruptcy restrictions order), offered a bankruptcy restrictions undertaking, had assets sequestrated, or been involved in proceedings relating to any of these.
The TenIntelligence due diligence team are well equipped to assist clients with these “FIT & PROPER” background checks. Please contact us for further information:
+44 203 963 1930 | +44 173 252 5810