The Senior Managers and Certification Regime, intended to improve standards and increase transparency and communication between the financial services industry and the regulators, are due to be implemented in just weeks.
These rules make individuals accountable for their own behaviour and ensure that those with significant influence regularly undergo checks confirming they are fit and proper to perform their responsibilities.
But there is an elephant in the room. What should companies do if they find out information about senior leaders that could affect their ability or suitability to do the job?
There is little doubt that implementing this new regulation, previously undisclosed information could be revealed – information which may be damaging to the reputation of businesses already tarnished with previous scandals.
So what action should be taken when issues are found?
With HireRight data showing that nearly two thirds (63%) of applicants are providing incorrect details when applying for jobs in areas including criminal records, previous employment, educational attainment and membership of professional organisations, there will inevitably be issues that are uncovered as part of these checks.
“I’m not sure that we know what to do if we find something – which would be the elephant in the room conversation.”
Indeed in some cases this has already happened.
“Because of a number of issues that have been raised – undisclosed directorships for examples – we have tightened our process.”
The FCA will not stipulate what it sees as appropriate so each firm needs its own clear policy outlining what is acceptable, what needs addressing and what could be a firing offence. This is no small task, but without it, all procedures will collapse.
Within the banking forums, financial service firms need to agree on what level of information to disclose and expect. This will create consistency within the industry and ensure that all firms have the same level of detail available to make decisions. This should be reviewed three to six months after implementation to identify any necessary adjustments.
Ultimately, there will be little extra clarity about all of this until the FCA starts to check the checks – and we won’t know what that looks like for some time.
- Review your existing policies and procedures on negative findings on background checks to identify your tolerance levels.
- Decide what your firm is comfortable continuing under the new regime.
- You should have an appeal and escalation process in place to handle any findings, particularly for existing employees.
- You also need to review your employment policies and documentation to ensure they support the process of re-screening.
Download the full whitepaper to get more information and advice on the new regulations.