Regulatory References Update

Of Relevance to:
All firms

In October 2015 the FCA launched a joint Consultation Paper (CP15/31) with the PRA on “Strengthening accountability in banking and insurance: regulatory references” – see Regulatory Roundup 69.

The consultation proposed introducing a new chapter in SYSC on ‘Regulatory References’ which would be referenced in the Approved Persons chapter of SUP (SUP 10C for ‘relevant authorised persons’) and SUP 10A (for firms that are not ‘relevant authorised persons’).

In its simplest form a ‘relevant authorised person’ is either:

  • A firm with permission to accept deposits; or
  • An investment firm that has permission for dealing in investments as principal and when carried on by it that activity is a PRA-regulated activity.

For further information on the relevant authorised person regulatory framework please see the article on the Senior Managers Regime which is also in Regulatory Roundup 69.

The FCA has now released Policy Statement PS16/22 which contains the final rules on regulatory references (which will appear in SYSC 22).

Although the need for ‘regulatory references’ is specific to firms that are ‘relevant authorised persons’ (the new rules refer to a ‘full scope regulatory reference firm’ which also captures a Solvency II firm and a large non-directive insurer) it is important to appreciate that the amendments to SUP 10A means that all firms are impacted by the proposals to a greater or lesser extent.

SYSC 22 will apply to both PRA and to FCA firms in that the latter will be required to provide references to the former in line with SYSC 22 i.e. in the scenario where an employee/ex-employee is moving into a PRA-regime firm.

We would draw firms’ attention to the need to:

  • Ensure that the HR functions are aware of the obligations arising in SYSC 22;
  • Obtain/supply references for possibly up to six years (SYSC 22.2.1(1)(d) and SYSC 22.2.2(3)); and
  • Refer to the template (SYSC 22 Annex 1R) to be used by the provider of the regulatory reference.

The table on page 26 of PS16/22 may be useful in that it reminds both relevant authorised persons and FCA only authorised firms of which aspects of the new framework applies to them.

The final rules in SYSC 22 can be found in Appendix 1 of PS16/22.

The rules, subject to the transitional provisions in TP 5, come into force on 7 March next year.

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