As you'll no doubt be aware, the senior managers and certification regime (SM&CR) is now upon us.
In the run-up to its introduction on 9 December, you'll have considered the senior manager roles in your business and those who need to be certified.
But it's also important to understand the new requirements around regulatory references under SM&CR. These apply to both any appointments you make, and the references you give to other firms.
Firms must obtain an appropriate reference for potential employees in new SM&CR roles.
When looking to appoint a senior manager, you must get a reference one month before the end of the application period.
You need to also receive a reference before confirming that an employee meets the requirements under the certification regime, including renewing existing certificates.
You must take reasonable steps to obtain a reference from the current employer, and anyone who has employed the applicant within the last six years (this applies to any employer, not just authorised firms).
It's worth setting out to them the purpose of the request and which requirements under the referencing rules apply.
Once a reference from another firm has been requested, it should be provided as soon as reasonably possible, and ideally within six weeks of the request.
References should be true, fair and based on documented fact.
Firms must disclose any information they think is relevant to a fit and proper assessment, and should aim to provide a complete picture of the employee's conduct record.
You are only required to disclose information on events that have occurred six years before the date of the reference request and up to the date of reference.
However, where there are cases of serious misconduct these must be disclosed whenever they happened, though what counts as serious misconduct is somewhat down to your own interpretation.
Information that hasn't been verified doesn't need to be, but should be included if you see fit to do so.
For example, you want want to disclose where disciplinary action has been taken against the employee but an investigation has yet to prove they are responsible.
Frms are obliged to update any references they have given if new information comes to light, within six years of the reference, which would have affected how the reference was written.
Guidance for SM&CR firms
If the reference is not from an SM&CR firm, they may provide this in any format they wish.
SM&CR firms must use the reference template as set out by the FCA (more on this below), although minor changes are permitted.
The template is a set of yes/no questions which cover off the roles the employee carried out during their employment, as well as any disciplinary action against them.
Additional information can be included in the same document as long as it doesn't alter the scope of the mandatory questions.
Once a reference has been secured, SM&CR firms need to keep orderly records in order to comply with the FCA handbook rules.
In particular, you need to keep a record of the employee's fit and proper assessment and disciplinary history.
There are no set time limits to retain these records, but bear in mind you may be asked to make a reference relating to this information in future.
In terms of next steps, if you haven't done so already it's worth getting your human resources team to review the firm's processes and reference request templates to ensure they are compliant.
For Apricity clients, there is a copy of the regulatory reference template available in our Knowledge Base.