The FCA defines various instances when you do and and don’t need to obtain Regulatory References:
Appointment of a Senior Manager
Normally, regulatory references should be obtained before an application for the approval of a Senior Manager is submitted to the FCA.[1] However, the FCA understands that this might not be possible in all circumstances. As such, it is permissible to obtain regulatory references no later than one month before the end of the “application period”.[2] Broadly, the “application period” is the period of three months (commencing from the time at which the FCA receives a completed application) which the FCA has to process an application for approval for an individual to act as a Senior Manager.[3] It is worth noting that an application will not be approved unless and until regulatory references have been obtained.
[1] PS16/22 “Strengthening accountability in banking and insurance: regulatory reference final rules”, page 9
[2] PS16/22 “Strengthening accountability in banking and insurance: regulatory reference final rules”, page 10
[3] SUP10C.10.26 and Section 61 of FSMA
Appointment of a non-SMF board director
Appointment of staff subject to the Certification Regime
With respect to the issuing of an ‘fit and proper’ certificate to Certification Staff, firms should obtain a reference before the certificate is issued or renewed.[1] However, the FCA recognises that, where a firm needs to fill a vacancy for a certification function which could not have been reasonably foresee, it may not be possible for the firm to obtain regulatory references prior to issuing a ‘fit and proper’ certificate. In such cases, the reference should be taken up as soon as reasonably practicable and, if the reference raises concerns about the individual, revisit the decision to issue the individual with a ‘fit and proper’ certificate.[2]
It is unlikely that annual fit and proper testing will, of itself, trigger a requirement to seek a new or updated reference.[1]
[1] SYSC 22.7.6G(3)
[1] SYSC 22.2.3R
[2] SYSC 22.7.10G
Sole traders
Change of role
The requirement to obtain a regulatory reference also applies where an individual changes jobs, for example, after a promotion. However, in these circumstances, the requirement is that the firm consider whether it is necessary to obtain (or refresh) a regulatory reference. It is not the case that the firm MUST ALWAYS obtain (or refresh) a regulatory reference on a role change.[1]
[1] SYSC 22.7.7G
Intra-group staff transfers
It is not necessary to obtain regulatory references in relation to intra-group staff transfers provided that “there are adequate arrangements in place” under which the firm that would otherwise have to request the reference has access to the same regulatory reference information sources as the firm that would otherwise be obliged to provide the reference.[1] In other words, where a group operates centralised records, it is not necessary to obtain regulatory references.[2]
[1] SYSC 22.8A.1R
[2] SYSC 22.8A.2G
Reasons why a firm can delay obtaining a reference
It is reasonable and permissible for a firm to delay getting a reference where asking for the reference would create a serious risk of:
- breaching the confidentiality of a wider commercial or corporate transaction;
- prematurely triggering the need for a public announcement; or
- the candidate not applying for the position in the first place because it would reveal to the candidate’s current employer the proposed move too soon.[1]
It is also possible to delay obtaining a regulatory reference for a Senior Manager where this would trigger a mandatory disclosure (e.g. to a stock market) that the appointment was being made.[2]
[1] SYSC 22.7.11G(2)
[2] SYSC 22.2.3R
