This is a preview. To continue reading please log in or Register to read this article

Discipline and dismissal: financial services

Updating authors: Nick Thorpe and Gemma Chubb
Consultant editor: Paul Ellison

NOTE: The Senior Managers Regime (SMR) and Certification Regime (CR) apply to all UK-incorporated banks, building societies, credit unions and PRA-regulated investment banks (s.71A Financial Services and Markets Act 2000) and replace the Approved Persons Regime for individuals working within those firms. The SMR and CR were extended to insurers on 10 December 2018, and will be extended to all FCA-authorised firms, which includes asset managers, brokers and consumer credit firms, from 9 December 2019.

Summary

  • Disciplinary action, including dismissal, against individuals in regulated firms is subject to the normal minimum requirements under general employment law principles. (See Overview)
  • Dismissal or disciplinary action against an approved person may trigger requirements to notify the Financial Conduct Authority (FCA) and/or the Prudential Regulation Authority (PRA). (See General notification requirements)
  • An investigation into an individual's conduct may reveal an issue that, if serious enough to have a regulatory impact, will need to be disclosed by the firm to the FCA and/or PRA. (See General notification requirement)
  • If an approved person is subject to disciplinary action, such as suspension or dismissal, the FCA and/or PRA should be notified within one business day of such action being taken. (See Suspension)
  • If potential misconduct by an individual has been identified, FCA- and PRA-regulated firms should consider whether or not it is appropriate to remove the individual from carrying out his or her controlled function while an investigation takes place. (See Suspension)
  • The FCA and/or PRA may choose to launch its own investigation into an individual's misconduct or they may require the firm to commission a skilled persons report into the problem. (See Investigation)
  • It is important not to assume that any breach of the FCA and/or PRA rules or Principles will automatically justify dismissal. (See Disciplinary action)
  • An individual may decide to resign or seek to negotiate an agreed exit to avoid an investigation and potential dismissal. (See Resignation or agreed exit)