PRA and FCA are consulting on regulatory references. The proposals, which take into account the recommendations of the Fair and Effective Markets Review, propose new rules for regulatory references for candidates applying for:

  • senior management functions (SMF) under SMR;
  • significant harm functions under the Certification Regime (CR) within banks, building societies, credit unions and PRA-authorised investment firms (relevant authorised persons (RAPs));
  • PRA senior insurance management functions under the Senior Insurance Managers Regime (SIMR);
  • FCA insurance controlled functions;
  • notified non-executive director (NED) roles and credit union NEDs; and
  • key function holders (KFH) within an insurer.

The key proposals:

  • require firms to request regulatory references from former employers of candidates applying for SMF, and certification functions in RAPs, along with SIMF at insurers, going back six years. PRA proposes a similar requirement for RAPs and insurers in respect of candidates applying for a KFH, notified NED, or credit union NED role;
  • amend certain prescribed responsibilities for Senior Managers in RAPs and insurers to include compliance with the regulatory reference rules;
  • require the inclusion of concluded breaches of the conduct requirements of FCA Conduct Rules (COCON), PRA Conduct Rules or Conduct Standards, and Statements of Principle and Code of Practice for Approved Persons (APER) going back six years;
  • require disclosures by RAPs and insurers in a standard format, including the need to confirm where there is no relevant information to disclose; and
  • require RAPs and insurers to update previous references given in the past six years, where they become aware of matters that would cause them to draft that reference differently if they were drafting it now.

Some proposals apply to all authorised firms, specifically rules that clarify a firm must not enter into any arrangements or agreements that limit their ability to disclose relevant information. Further proposals enhance systems and controls requirements relating to the retention of records and the policies and procedures for both requesting and providing regulatory references. The existing requirement for firms to disclose all relevant information in references remains.

PRA is also consulting on proposals for all KFH at insurers to have an up-to-date and agreed document setting out their scope of responsibilities (SoR), and for these insurers to retain these SoR documents along with the associated governance map for 10 years for Solvency 2 insurers, and six years for non-directive firms.

The regulators will consider in future whether to extend further requirements to all authorised firms.

Consultation closes on 7 December. FCA plans to amend the Glossary, SYSC and the Supervision Manual in time for 7 March 2016, and has produced new proposed Handbook forms. PRA proposes the PRA Rulebook: CRR Firms: Non-CRR Firms: Fitness and Propriety Amendment Instrument, the PRA Rulebook: Solvency 2 Firms: Non-Solvency 2 Firms: Fitness and Propriety Amendment Instrument [2015]  and a draft Supervisory Statement. The consultation also includes a draft reference template. (Source: Regulators Consult on Regulatory References)