Dealing with regulatory references under the SM&CR really isn’t that difficult if you are aware of these 10 key rules…
- You must request a regulatory reference from any firm which employed the reference subject in the last 6 years (even if the employer is not an FCA regulated firm).
- You should request a regulatory reference BEFORE seeking FCA approval for a Senior Manager and BEFORE issuing a ‘fit and proper’ certificate to a Certification Employee.
- The FCA requires all firms to use a specific template when responding to a regulatory reference request (you can find this template in SYSC 22, Annex 1).
- If you are an FCA regulated firm, you must respond to a regulatory reference request “as soon as reasonably practicable” (the FCA expectation is that this will usually be within 6 weeks).
- In providing a regulatory reference you must be fair to both the new employer AND the subject of the reference – you may have to allow the reference subject to comment on the reference itself.
- You need to provide information regarding the fitness and propriety of the reference subject going back up to 6 years (so you need to have robust recording-keeping processes).
- “Serious misconduct” on the part of a reference subject must always be disclosed and is NOT subject to the 6-year time limit on disclosures.
- You are not required to disclose information within a regulatory reference if that information cannot be verified (but you must try to verify it).
- You must revise a previously provided regulatory reference if new information which is material to the fitness and propriety of the reference subject comes to light.
- You CANNOT enter into non-disclosure arrangements that could limit your ability to disclose information within a regulatory reference (the legal obligation to disclose will override the non-disclosure arrangements anyway).
Another great way to deal with regulatory references is to have a great SM&CR compliance solution in place! Why not get in touch to see how Corterum can help?
