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Providing references: 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

  • General employment law principles apply in respect of references for employees at firms regulated by the Financial Conduct Authority (FCA) and Prudential Regulation Authority (PRA). (See Termination of employment > Providing references)
  • Additional regulatory requirements apply in relation to references for approved persons. (See References for approved persons)
  • New rules for providing references under the Senior Managers Regime (SMR) and the Certification Regime (CR) came into force on 7 March 2017. (See References under the Senior Management and Certification Regimes)
  • Firms are required to take reasonable steps to obtain references covering an individual's previous six years of employment, for individuals who are appointed to either a senior management function under the SMR or a certification function under the CR. (See Reasonable steps)
  • When supplying a reference under the SMR or CR, a previous regulatory employer is required to disclose all relevant information of which it is aware. (See Disclosure of relevant information)
  • Under the SMR and CR, firms have an obligation to update any regulatory reference given to a regulated firm on or after 7 March 2017, if new information comes to light that calls into question that individual's fitness and propriety. (See Updating regulatory references)
  • Employers should consider either refusing to include a standard reference within a COT3 or settlement agreement or including a clause in the agreement limiting a standard reference to a non-regulated role. (See Settlement agreements)