Clare Barlow opened the session and posed thought provoking questions from the audience to Olivia Toulson, who delivered an engaging and insightful overview of SMCR and its impact on recruitment, disciplinary and performance procedures through to termination of employment. She finished the session by outlining a firm’s obligations in respect of regulatory references.
Olivia spoke of the enormous impact that SMCR will now have on many firms in the financial services sector saying “virtually every employee is affected to some degree”.
The main aim of the Financial Conduct Authority (FCA) has been to ensure greater individual accountability and personal responsibility following the financial crash in 2008. Tighter regulation of a sector that historically policed itself has meant one thing: Big change.
Olivia described the impact of SMCR on the three key groups of workers in an SMCR firm who now fall into the categories of Senior Manager, Certified Person or Conduct Rules staff. She outlined what the rules meant for each of these groups and what employers now needed to do to update their offer letters, contracts of employment and other policies and procedures to comply with SMCR requirements and best practice.
The focus then turned to one of the more complex areas of the regime: the Conduct Rules. Olivia ran through various scenarios and case studies on what might constitute a breach of the Conduct Rules and then the audience got their chance to put their knowledge to the test through polled responses to case studies.
The audience were guided through the tricky subjects of dishonesty outside of work and Senior Manager accountability for bullying and harassment within their teams. As well as whether each scenario amounted to potential breaches of the Individual or Senior Manager Conduct Rules, the audience was also asked to consider the question of fitness and propriety. There are no straightforward answers in these scenarios and it is likely we will see the industry working together to develop common approaches.
Olivia reminded the audience of the obligations under SMCR to report all breaches that result in disciplinary sanctions (including disciplinary warnings, disciplinary suspension, dismissal and reductions in compensation) and that such breaches need to be disclosed to future employers on regulatory references if they occurred in the relevant time frame. Because of this, she highlighted the need for disciplinary charges to be carefully framed, investigated thoroughly and fully reasoned.
The session finished by looking in more detail at the regulatory reference regime, in particular how to deal with box G of the FCA’s reference template (the ‘catch all’ box that requires firms to disclose all information that it reasonably considers to be relevant to the requesting firm’s assessment of fitness and propriety), considering scenarios such as what happens if someone resigns part way through an investigation, and can firms still say that a warning will be “expunged” from the record after a certain period of time has elapsed.
A recording of the webinar is available to watch on Birketts’ YouTube page.
If you have queries on the implications of SMCR on the employment lifecycle or would like to know more about the services we offer, please contact Olivia Toulson.
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The content of this article is for general information only. It is not, and should not be taken as, legal advice. If you require any further information in relation to this article please contact the author in the first instance. Law covered as at March 2021.