London 10th November 2020 – Earlier this year the FCA updated their webpage on SM&CR guidance for solo regulated firms. These changes relate specifically to good and bad practice in respect to fitness and propriety (F&P) assessments and conduct rules training.
Overall, the SM&CR standards work to ensure greater personal accountability at all levels, with a minimum standard of conduct, whilst ensuring staff in key positions are fit and proper to perform their roles. Firms are required to check and certify that employees are fit and proper in this professional aspect at least once a year.
Firms are expected to demonstrate thorough and consistent assessments of the F&P of Senior Managers and Certification Staff, under the Certification Regime. The update highlights positive indicators of good practice within staff assessments, intending to ‘reduce harm to consumers and strengthen market integrity by setting a new standard of personal conduct’ for financial services employees. The FCA lists the following as positive indicators of good F&P practice:
- F&P checks identify new issues with staff with some failing assessments
- Relevant Senior Management Functions (SMFs) actively oversee the F&P process and ensure appropriate reporting
- Competence assessment demonstrates that thought has been given to each specific role (including managers)
- Development plans are put in place as a result of F&P assessments
- Managers are adequately trained in the company’s approach to F&P and understand what is expected of them
- A detailed F&P process has been introduced and integrated into existing HR/performance management processes, and it covers what happens if someone fails F&P testing
- F&P panels — which include senior managers — are convened to consider marginal cases
- Firms have appropriate criteria and a robust process for identifying certification staff on an ongoing basis
- Regulatory references disclose misconduct/relevant concerns and are produced in a timely manner
Due to the current COVID-19 pandemic, the deadline for the implementation of individual F&P assessments has moved from 09 December 2020 to 31 March 2021.
It is advised that firms take heed of the update and consider its relativity to their teams. If a member of certification staff is considered to lack F&P, this may well have serious consequences for them.
Annual or continuous employee screening is an effective employee review method for HR departments wishing to stay compliant with these changes. Vero Screening is an expert provider of pre-employment background checks and employee rescreening services, in correspondence with the FCA’s guidance.
Click here for more information and contact us if you wish to discuss how we can help you comply with SMCR regulations.