Are you confident your Human Resources function is SM&CR compliant?

Recruitment and Selection 

Job Descriptions and Person Specifications 

These need to reflect the requirements of the SM&CR regime, be clearly defined, and include an outline of responsibilities including the areas and roles they will be held accountable for.

Assessments of Candidates 

Interview processes must assess a candidate’s fitness and propriety, behaviours around accountability, and, how their competencies align with the responsibilities they will have.

Conditions of Employment 

Offers of employment must be conditional upon receipt of satisfactory background screening (including receipt of satisfactory regulatory references) and being assessed as fit and proper. 

Recruitment Policies and Procedures

Processes and procedures need to account for the time required to obtain (and provide) regulatory references. 

Induction and Development

Training 

Firms must ensure they are trained accordingly depending on individual roles. Senior Manager's need to be trained on their duty of responsibility and the “reasonable steps” they need to take to meet their responsibilities. Conduct rules staff need to be trained in respect of the conduct rules, initially and on an ongoing basis. Confirmation of training also needs to be logged to enable this to be monitored. 

Succession Planning

Consideration needs to be given to SM&CR requirements as employees "move up the ranks”. If an individual is moving from one certification role to another, they need to show an up-to-date certificate that they have been deemed fit and proper for their role. 

Ongoing Certification 

There should be a certification schedule in place to ensure certificates are updated at least 12 months after issue. A self-declaration should be completed by the individual to confirm they believe they have behaved in a fit and proper manner and commit to upholding high standards of behaviour and competence.

HR Policies & Procedures

Written Statement of Terms (Contracts of Employment)

These must reflect the requirements of the SM&CR regime and include contractual provisions associated to the relevant “function” assigned to the employee.

Ongoing Employment Screening

This supports with the compulsory requirement for both Senior Managers and Certified Staff fitness and propriety to be assessed on an ongoing basis (whether annually or ad-hoc). 

Disciplinary Policy and Procedure

Examples of misconduct or under-performance, and the requirement to inform the FCA should be included. The breach reporting process and disciplinary process also need to be aligned to avoid inconsistent decisions as well as a cycle of appeals. There must also be adequate workflows and systems in place to support this. For example, systems must be able to record documentation such as formal written warnings and the formal outcome of any actions taken.

Grievance Policy and Procedure

The breach reporting process and grievance process need to be aligned to avoid inconsistent decisions as well as a cycle of appeals. 

Whistleblowing Policy and Procedure

Details of the FCA’s whistleblowing facilities, as well as the process to be followed when reporting a breach of the FCA’s rules and principles must be referenced. 

Offboarding 

Handover Policies - Senior Managers

Steps must be taken to ensure a smooth transition when someone subject to SM&CR moves to another role or exits the firm. Those in SMF roles must ensure that the person replacing them has everything needed to do their job effectively.

Providing Regulatory References

Regulated references are required from all previous employers in the past six years for those in SMF, certification, and non-approved non-executive director roles. Information required must be provided in the FCA’s prescribed format. If any significant new information comes to light, references must also be updated. HR systems in place should enable such information to be gathered and retained. 

Our outsourced HR Consultancy team can support you with navigating the above by conducting HR compliance reviews, giving you the peace of mind that your firm is protected. Reach out to our HR Consultancy team today to find out more about how the above may affect your organisation.