FCA’s clarification on SM&CR regulatory references

This post was written by Carly Phillips-Jones.

The FCA has clarified some key points relating to regulatory references within the Senior Managers & Certification Regime (SM&CR) following feedback it received on the challenges firms face when obtaining regulatory references. The purpose of these references is to help firms make informed decisions about the fitness and propriety of individuals to whom they intend to assign Senior Management or Certification Functions (or appoint as non-approved Non-Executive Directors).

The FCA has confirmed that:

1. Firms should request, and respond to requests for, regulatory references promptly. Although SYSC 22 includes guidance that they should be provided within 6 weeks, this is a limit, not a target.

2. When providing regulatory references, use the template in SYSC 22 Annex 1, which has recently been updated. Ensure the template is complete and the information provided is accurate, before sending it. Failing to use the correct template or sending incomplete or inaccurate information can cause delays.
3. Firms need only take reasonable steps to obtain regulatory references. If they experience difficulties obtaining regulatory references from a particular firm, contact the FCA. If they are unable to obtain regulatory references as part of an application, set out the steps taken to obtain references - this will help avoid delays during the application assessment.
4. Firms should assess regulatory references on a case-by-case basis and individuals shouldn’t be automatically rejected due to a qualification in their references. Firms also shouldn’t have a quota for the number of qualified references they will accept.

The SM&CR guides for insurers and solo-regulated firms provide further information on the regime requirements.

If we can assist with any aspect of regulatory references or SM&CR more generally, please get in contact with our expert, James Green.