Regulatory Reference Guide

The Senior Managers & Certification Regime is coming into force on 9th December and while you are busy considering Senior Manager roles and certifications, you mustn’t forget the requirements around regulatory references for any appointments you make.

Obligation to obtain references

All UK SM&CR firms must obtain an appropriate reference on a potential employee with regards to new SM&CR roles. When considering appointing someone to a Senior Manager Function you must acquire a reference one month before the end of the application period. You need to also receive a reference before confirming that an employee meets the requirements under the certification regime, this includes renewing existing certificates.

You must take reasonable steps to obtain a reference from the current employer and anyone who has employed the person in question within the last six years (this applies to any employer, not just authorised firms). You should set out to them the purpose of the request and which requirements under SYSC 22 apply to the reference you are asking for.

Obligation to give a reference

Once you have requested a reference from another firm, they must provide this to you as soon as reasonably practicable, although, this is expected to be within six weeks of the request. References should be true, fair and based on documented fact. The firm must disclose any information which they think is relevant to a fit and proper assessment, and should aim to provide a complete picture of the employees conduct record.

The firm is only required to disclose information on events that have occurred six years before the date of the reference request up to the date of reference. However, they must disclose cases of serious misconduct that have happened at any time, although what constitutes as serious misconduct is somewhat down to their interpretation.

Information that has not been verified does not need to be, but maybe, included should they see fit, for example, if disciplinary action has been taken against the employee but an investigation has yet to prove they are responsible. However, firms are obliged to update any references they have given if new information comes to light, within 6 years of the reference, which would have affected how it was written.

Guidance for SM&CR firms

If the reference is not from an SM&CR firm, they may provide this in any format they wish. However, SM&CR firms must use the reference template as set out by the FCA, although minor changes are permitted. The template is a set of yes/no questions which cover off the roles that the employee has carried out during employment, as well as disciplinary action against them. Additional information can be included in the same document so long as it does not alter the scope of the mandatory questions.

Once a reference has been secured, SM&CR firms need to keep orderly records to comply with rules in the FCA handbook, in particular, you need to keep a record of the employees fit and proper assessment and disciplinary history. There are no set time limits to retain these records, but bear in mind you may be asked to make a reference around this in future.

What should I do now?

If you have not already done so, get your HR team to review their processes and reference request templates to ensure that come the 9th December they are ready. For Apricity clients there is a copy of the regulatory reference template available in our Knowledge Base.

We are running a webinar on the 2nd December where we will talk about regulatory references along with several other SM&CR related points, more information can be found here. If you want any more help with SM&CR do get in touch.

Tom Richmond – Technical Consultant