Firms must establish, implement and maintain policies and procedures that are adequate for the purposes of comply with the SM&CR regulatory references requirements.[1]
Regulatory references are a key input into the fit and proper assessment process. They are relevant for all external recruitment and for some internal promotions.
At a high level, these requirements oblige firms to take “reasonable steps” to obtain regulatory references covering the previous six years of employment with respect to all Senior Managers, all certification staff[2], and non-executive directors who are not senior managers (“Non-approved NEDs”).[3] The requirements also apply to Appointed Representatives of the firm, as well as to the firm itself.[4] The FCA believes that it is the responsibility of each individual firm to determine what “reasonable steps” means in this context.[5]
Regulatory reference information is to be shared using a standard template, which is found in SYSC 22, Annex 1.
Firms which are subject to the SM&CR must try to obtain a reference from a previous employer even if the previous employer was not an FCA regulated firm.[6]
[1] SYSC 22.8.1R
[2] SYSC 22.2.1R(1)(b)
[3] SYSC 22.2.1R
[4] SYSC 22.8.3R
[5] PS16/22 “Strengthening accountability in banking and insurance: regulatory reference final rules”, page 9
[6] SYSC 22.7.4G
