The FCA’s Directory of financial services workers: no place to hide?

• United Kingdom

• Financial services disputes and investigations
• Financial services

12-03-2019

The FCA has published its final rules in PS19/7 on its proposed new online Directory of financial services workers, which is expected to go live in 2020. The Directory will sit alongside the Financial Services Register, the public record containing details of FCA and PRA authorised firms and approved persons (including senior managers). The Directory will include details of other individuals such as certified persons who might cause harm to consumers, firms or other stakeholders. The creation of the Directory is consistent with the commitment to transparency of details of key members of staff in the Financial Services and Markets Act 2000. As Parliament has shifted the vetting of many individuals, formerly subject to approval under the approved persons regime, to firms through certification regime, the Directory will help ensure that the publication of details about these individuals will not depend on a link with FCA or PRA approval. These details, like those of FCA and PRA approved senior managers, will be out in the open.

Banking firms and insurers will be able to submit data to the new Directory from September 2019; other firms will be able to submit data after commencement of the extension of the senior managers and certification regime (SMCR) on 9 December 2019.

It is hoped that the Directory information will, for example, help customers to verify the identity of those offering financial products or services. For firms recruiting new hires, it will assist in cross checking regulatory references and carrying out inquiries into previous work histories. It is also anticipated that the data accuracy measures proposed for the Directory will assist firms in ensuring they have carried out their annual fitness and propriety checks.

Who will be covered by the Directory?

The Directory will be a new public register that contains details of:

• Certified individuals under the SMCR

• Executive and non-executive directors who are not senior managers

• Other individuals who are sole traders or appointed representatives where they undertake business with clients and require a qualification to do so

What will the new Directory contain?

The Directory will include the following information:

• Employer details (place of business and contact details)

• Restrictions applying to a firm’s regulated activities

• Individual’s name and reference number

• Relevant roles held

• Start and end dates of each role

• Type of business the individual is qualified to undertake (if a qualification is required)

• Workplace location

• Customer engagement method

• Membership of relevant accredited bodies

• Regulatory sanctions and prohibitions

• Date information was last updated

The Directory will not contain information on remuneration.

What will happen to the FCA Register?

The Financial Services and Markets Act requires the FCA to maintain a public record of regulated firms and approved individuals (senior managers under the SMCR). The FCA discharges this duty, with the PRA’s assistance, through maintenance of the Register and will continue to do so. The Register, however, will contain fewer individuals since the Act has reduced the number of individuals whom the FCA or PRA are responsible for approving to those performing senior manager functions. Firms now responsible or soon to become for certifying many individuals whom the FCA and PRA are currently were responsible for approving. The Directory’s coverage of those individuals, in addition to those formerly covered under the approved persons regime, subject to the certification regime is, therefore, consistent with the broad statutory requirement for making details of important categories of staff available to the public.

What do we need to do and by when?

Firms should already be keeping the information they submit to the Register up-to-date and accurate.

While banking firms and insurers will be able to submit information to the new Directory from September 2019, the deadline for them to make submissions to the Directory is March 2020, when the information will go live. The deadline for solo regulated firms will be 9 December 2020. Information that is submitted prior to the deadlines will not be uploaded until these dates.

The information that must be provided by firms is set out in the final rules and includes, for example, the national insurance numbers (or passport numbers) of Directory persons (this information is not published in the Directory). Data can be submitted using the FCA’s Connect system or the multi-entry facility.

Firms will have 7 business days to update information on joiners, leavers and changes in circumstances. This is in line with the Register, where firms must notify the FCA no later than 7 business days after a senior manager changes their personal details. If there are no changes, firms must notify the FCA that the information is still correct no later than 12 months after the last notification.

Health warning

The FCA proposes to include a warning in the Directory to highlight where information may be out of date which will apply where firms have not made changes to data for the past 12 months.

Where firms have not completed their declaration of accuracy, have submitted late or inaccurate data submissions or where a data error comes to light, a £250 administrative fee may be applied. More serious sanctions may be applied in more serious cases of breach or repeated breaches.

Directory persons are responsible for providing accurate information to their firms; the employer must then carry out the necessary checks to verify the information and notify the FCA. The relevant senior manager will be ultimately responsible for the information submitted to the FCA for inclusion in the Directory and the FCA has stated that guidance will be provided on the declaration that must be made in the notification template. The FCA may take action against the accountable senior manager where there have been, say, repeated breaches of the reporting requirements. The senior manager would have to show that they had taken such steps as could be reasonably required to be taken to avoid the contravention.

https://www.fca.org.uk/publication/policy/ps19-07.pdf

How can Eversheds Sutherland help?

The Eversheds Sutherland financial regulation and employment team acts as both a trusted legal adviser, risk manager and strategic business partner. Our international network of lawyers and former regulators, advise leading banks, broker-dealers, investment managers and insurance companies on the full range of regulatory process, including regulatory change implementation, enhanced supervision (including skilled persons reviews) and regulatory investigations as well as transactions and ongoing regulatory and compliance advice.

Our in depth understanding of the sector and experience with the practical implementation of new governance arrangements, means that we are very well placed to guide you through the implementation process, including coordinating the FCA application process. We are already advising clients in relation to many of the areas covered in the Policy Statement. We can also offer bespoke training on the issues raised for all sectors of the financial services industry.