Insight: FCA Decision Notice Confirms the Need for Financial Services Employee Screening.

At the end of March of this year the Financial Conduct Authority (FCA) issued a Decision Notice, withdrawing approval of independent financial advisor, and sole director at Frensham Wealth Limited, Jon Frensham (formerly known as Jonathan James Hunt).

 

According to the FCA’s notice, in March 2017 Frensham was convicted of attempting to meet a child following sexual grooming. He committed this offence whilst he was an approved person. Mr Frensham was sentenced to 22 months’ imprisonment, suspended for 18 months.

 

Due to the nature of his crimes, the advisor is no longer considered a fit and proper individual. As a result, the FCA has withdrawn his approval to perform his current senior management functions and made an order prohibiting him from performing any functions in relation to regulated activity.

 

The Senior Managers and Certification Regime (SMCR) aims to:

• Encourage a culture of staff at all levels taking personal responsibility for their actions.
• Make sure firms and staff clearly understand and can demonstrate where responsibility lies.

 

The FCA stated that ‘Given the nature and circumstances of his offence, the FCA considers that Mr Frensham is not a fit and proper person to perform any function in relation to any regulated activity carried on by any authorised or exempt persons or exempt professional persons. This is because he lacks the necessary integrity and reputation.’

 

With fit and proper (F&P} checks forming a key part of the SMCR, this significant decision by the FCA is testament to its approach of investigating and sanctioning regulated persons for non-financial misconduct.

We’re seeing a stream of individual investigations of those within the financial services industry, and stories such as this one highlight the importance of annual employee criminal record checks, in order to ensure that workers are meeting the industries fit and proper standards.

 

Whilst the day-to-day fitness and propriety of employees is the responsibility of the employer, official behavioural checks can and should still be completed. As within many industries, credible firms in Financial Services require employees to undergo a criminal record check before gaining employment in certain posts. Continuous ‘in-employment’ checks – which may also include financial integrity, adverse media and compliance checks – encourage a culture where staff take responsibility for their actions and do not commit misconduct in or outside of the workplace.

 

In the UK, Disclosure and Barring Service (DBS) checks are used to confirm whether a candidate has any records of convictions, cautions, reprimands or final warnings. What’s included in a criminal record background check will depend on which of the three types of DBS check is run (basic, standard or enhanced). Find out more about this service, here.