KnowYourPeople

The Senior Managers and Certification Regime (SMCR) was extended to all financial firms on December 9th. Almost 50,000 organisations authorised by The Financial Conduct Authority (FCA) now need to adhere to its strict requirements.

SMCR is all about increased accountability of individuals. It sets minimum standards of behaviour and aims to move organisations away from a culture of compliance to a culture of seeking to ‘do the right thing’.

Under SMCR, financial services firms need to ensure that senior managers/certified persons are fit and proper for their roles. This means organisations need to consider a person’s honesty, integrity and reputation and will therefore need to review their background.

This can include convictions of criminal offences, understanding their financial situation and gathering detailed references from previous employers.

Criminal history

SMCR requires that Senior Managers undergo ‘Standard’ criminal record checks, which highlight both spent and unspent convictions. Other staff occupying a certified role or non-execs are only eligible for a basic criminal record check.

If someone has spent a significant amount of time outside of the UK, the FCA recommends an overseas criminal record check where they were based for as full a view as possible of a person’s past.

Financial integrity

Financial integrity is a key indicator of a person’s past or current behaviour and is particularly important where organisations believe there may be a heightened level of risk associated with people in certain roles.

Adverse financial checks can reveal any CCJs registered against their name, or if they have been declared bankrupt.

Past employment

While reference checks continue to be a standard requirement across the majority of sectors in the UK, financial services organisations are subject to a more robust requirement under SMCR. These are now known as ‘Regulatory References’ and should follow the format of the template in the FCA Handbook.

It’s up to the organisations providing references to respond within 6 weeks, and to provide updates to existing references. This means if additional information is discovered following submission of an original reference, the information must also be provided to the new employer.

Additional indicators

SMCR lays out a clear requirement in terms of checking an individual’s fitness and propriety, but organisations may consider conducting additional checks which further strengthen their approach to SMCR and vetting in general.

These additional checks may also be required as part of an existing HR policy for new employees working in roles of a sensitive nature, and might include:

Monitoring

It’s important to consider that people’s circumstances and behaviour may change over time, which means that ongoing checks should play an important part of your ‘in-role’ checks policy.

Running recurrent checks is made easier by using technology to ensure the checks are conducted compliantly and are auditable, particularly in a regulated environment such as financial services.

If you need advice, guidance or practical support complying with SMCR, GBG’s team of consultants and our online vetting service, KnowYourPeople help. Click here and complete our enquiry form to find out more.