Financial Services

The financial services sector (which includes commercial banks and building societies, investment banks and insurance companies-please see our insurance page) is, unsurprisingly, one of the most highly regulated industry sectors in terms of employment screening. Regular ‘fit and proper’ checks for employees performing regulated roles must consider their honesty, integrity and reputation; their competence and capability within their role; and their financial soundness.  Prior to March 2016, the Financial Conduct Authority (FCA) assumed the primary responsibility for undertaking these checks. However, with the subsequent introduction of the Senior Managers and Certification Regime (SM&CR), this burden of responsibility has shifted from the FCA to the financial services firms themselves.

As a result, employers now need to satisfy themselves that their Senior Managers are fit and proper before seeking the FCA’s approval. Thereafter, employers must continue to monitor whether their certified employees remain fit and proper (Post-employment screening), undertaking at least one review per year to determine whether the FCA would have any grounds for withdrawing an employee’s certification.  Full details of the employers’ regulatory requirements can be found in the FCA’s ‘Fit and Proper’ sourcebook. It covers the requirements for recruiting new staff and for the ongoing assessment of the fitness and propriety of approved Senior Managers and all staff employed to perform an FCA certification function.  The FCA’s sanctions for non-compliance include publicly censuring a firm or imposing a financial penalty. The intention in both cases is to promote high standards of market conduct, to deter individuals from breaching the regulations and to demonstrate the benefits of compliant behaviour. 

Currently, one of the most challenging aspects of screening is the requirement for “regulated references” to be provided by any FCA-regulated firm where an employee has previously worked. Whereas a standard employment reference would typically come from the HR department, a regulated reference normally requires the involvement of a firm’s compliance department. This would be expected to disclose details of their conduct record, including any investigations or disciplinary warnings, for example. However, firms currently have up to six weeks to provide an appropriate and compliant reference; a timescale that is hardly conducive to fast and effective background checks.

We also tend to see some confusion relating to Disclosure and Barring Service (DBS) criminal checks in this sector. The regulations state that Standard DBS checks are required on FCA-designated senior management functions only. With very few exceptions, people involved in certification functions and other roles would only be eligible for Basic Disclosure.  Many employers misinterpret the guidance and want to undertake Standard DBS checks for certification function roles and Enhanced DBS checks for their senior management functions, despite the latter not even being permissible.

In terms of other checks employers may consider running, a search of the Cifas Internal Fraud database is often cited as a best practice check. Although only available to members of Cifas, this allows employers to check whether an individual’s name appears on this database of people known to have been involved with internal fraud in the past.

The introduction of social media checks into this sector’s screening processes at some point in the future seems to be growing increasingly likely. And finally, as with many sectors, we’re seeing firms are moving away from accepting copies of candidate documentation as proof of address and identity for screening purposes. Instead, they’re opting for more reliable and insightful electronic data checks and ID validation.

Checks that employers may want to consider running in this sector

Right to Work: We’ll ensure that a candidate’s documentation meets the current Home Office requirements. We can also repeat checks as and when needed for individuals who have a limited entitlement to remain in the UK.

Identity checks: To prevent employers falling victim to identity fraud, we can undertake electronic verification checks on identity documents provided by a candidate. Alternatively, we can provide online identity checks, using biographical data.

Criminal record checks: We’ll undertake the appropriate level of UK criminal record checks, subject to strict eligibility guidelines (Standard for senior management and controlled functions; Basic for certification functions and most other roles). We’re also able to obtain overseas criminal records for candidates with an international background.

Employment history: We can verify a candidate’s work history and references for the past six years, including checks on the existence and authenticity of all listed employers. We will also pursue FCA regulated references for SM&CR roles. Using our CV comparison service, we can also check for any discrepancies between the CV used to secure an interview and the subsequent findings of the full background check.

Professional and academic qualifications: Where applicable, we can check the validity of someone’s professional accreditations or registrations while also checking that their academic qualifications are genuine. For all professional and academic qualifications, we’ll always check at source with the awarding body.

Financial Services Register check: We'll check an individual's status with the Financial Conduct Authority (FCA) and Prudential Regulation Authority (PRA), establishing their permissions, disciplinary history and waivers.

Fitness and propriety check: This is a self-declaration process covering topics such as any credit issues, directorships or convictions that a candidate may have had.

Cifas internal fraud database search: We’ll check to see whether a candidate appears on the Cifas database of employees known to have committed fraud in the workplace.

Credit checks: We’ll establish a candidate’s identity, address history and financial status via credit referencing agency records. The search will reveal details of financial probity and information including County Court Judgements, bankruptcies and voluntary arrangements within the last six years. This search will be recorded on the candidate’s file but will not be visible to other parties and will not affect the candidate’s credit score. 

Directorship checks: We'll check to establish whether a candidate holds any company directorships and whether or not they are disqualified from being a director.

International fraud and sanctions watchlists: We’ll check to see whether a candidate’s name appears on any of the hundreds of publicly available watchlists worldwide, relating to anything from terrorism and fraud through to being a barred or politically exposed person.

Social media checks: An increasingly popular – and relevant – check for employers keen to understand whether someone’s social media activity could damage their brand, reputation or client relationships. As well as highlighting illegal activity and undesirable characteristics, such checks can also play a part in authenticating a candidate’s employment history.

Our clients in this industry include

Financial Services News

  • FCA announce continued delays processing applications for Senior Managers
    September 17 2021| Verifile
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  • 'A major, major initiative’: California wants to create its own Consumer Financial Protection Bureau
    February 21 2020| Verifile
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  • The Senior Managers & Certification Regime – Righting Regulatory Wrongs?
    March 16 2020| Verifile
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