Financial services register will be complemented by new directory of staff

Out-Law News | 09 Jul 2018 | 4:17 pm | 2 min. read

A new directory of those working in financial services will be introduced alongside the existing financial services register, the Financial Conduct Authority (FCA) has announced.

The directory will list both senior managers, who are approved by the FCA, and staff certified by their firms as being 'fit and proper' under the Certification Regime, the FCA said. The directory will be publicly accessible, so both consumers and other firms will be able to check the "status and history" of financial services staff and perform user-friendly searches, for example by location, according to the regulator.

The FCA has published a basic prototype version of the directory for comment, alongside a consultation paper. It is seeking views on which individuals should be included in the directory; what information should be published about each person; and when firms will be required to submit and update information about their employees under the new system. The consultation closes on 5 October 2018.

Both the FCA and the Prudential Regulation Authority (PRA) have also published policy statements setting out how the Senior Managers and Certification Regime (SM&CR) will be extended to insurers. Separately, the FCA has also published its policy statement on extending the SM&CR to FCA firms and confirmed that Treasury "has decided that the regime for [FCA] solo-regulated firms will commence on 9 December 2019".

"The SM&CR sets clear standards for the conduct that consumers and regulators expect from all financial services staff," said Jonathan Davidson, FCA executive director of supervision. "These standards of behaviour are central to the FCA's priority of promoting healthy cultures in firms."

"We've listened to feedback from firms and consumers about the importance of being able to check the status of financial services staff. Introducing the directory will make it easier for people to be confident they can find the right people to deal with," he said.

The SM&CR came into force for  banks  on 7 March 2016, and will be extended to insurers on 10 December 2018. The regime was designed to make individuals at regulated firms more accountable for their conduct.

The senior managers' regime requires firms to assign responsibility for certain areas of the business to named senior individuals, while the certification regime requires firms to annually assess the fitness and propriety of staff in certain roles. Many certified individuals would previously have appeared on the financial services register as 'approved persons' but will not be included in it under the SM&CR.

The new directory is the FCA's solution to this problem, which was identified by many in the financial services industry during the FCA's consultation on the extension of the SM&CR. The directory will allow the public to access information on senior managers the FCA continues to approve and on a wide range of other financial services staff - such as advisers, traders and portfolio managers - in a way that is "more accessible and user friendly", the FCA said.

The FCA is proposing to include more information in the directory than is currently accessible through the financial services register. It intends to allow users to search by workplace location, and by type of business that the individual is qualified to carry on. Any regulatory sanctions or prohibitions the FCA or PRA have published about individuals would also be included in the search results, "to make clear which individuals are prohibited or have limitations on the activities they are permitted to undertake".

Financial regulatory expert Michael Ruck of Pinsent Masons, the law firm behind, said that the new system would raise questions about the extent to which the public and the FCA could seek to rely on a directory of individuals including those certified as fit and proper by their employers, rather than by regulators.

"The FCA will have determined that those who hold senior manager roles are fit and proper, but will be unsighted on those who are certified," he said. "Should a customer rely upon the FCA's directory and not be treated fairly by a certified individual, to what extent can the FCA be held accountable - and would this undermine the existence of the directory itself?"