Choosing the right person to join your business comes with a boatload of considerations – not only whether the candidate has the right technical and soft skills for the role, but also whether you feel their work ethic and values align with those of the business as a whole.
And, I would say the most important element of all, whether or not you like them. Will their personality fit with the rest of the team, and help to make your workplace a happier and more productive place to be?
However, for financial advisers, hiring new staff has an additional layer of complexity. As is the case with so many areas of advisory businesses, the Financial Conduct Authority keeps a keen eye on the process of recruiting new advisers.
Just like you, the regulator wants to make sure that the competence, experience and integrity of individuals involved in the provision of financial services is of the highest standard.
And, in order to achieve this aim, the FCA requires that an individual’s fitness and propriety is checked prior to recruitment and on an ongoing basis.
But what does this mean in practical terms?
Well, if your firm is intending to recruit a senior manager function (SMF) or a certified person (eg investment adviser, mortgage adviser, supervisor who is not a senior manager) you must, as part of your recruitment procedures, take into account the knowledge and skills of the individual in relation to the knowledge and skills required for the role.
You must also take reasonable steps to obtain sufficient information about the individual’s previous relevant activities and training, and to obtain information about the knowledge and skills of the individual, including appropriate examination passes.
The FCA expects your firm to take into consideration an individual’s honesty, integrity, reputation, competence, capability, and financial soundness when recruiting.
To help determine whether the candidate meets these standards, your firm should undertake fit and proper checks prior to them starting in the advisory role.
Vitally, your firm must not allow an employee to engage in an activity unless the employee has been assessed as fit and proper.
Appointing someone under supervision to assess their competence under the FCA’s T&C rules would not affect their FIT assessment.
So, now to the nuts and bolts of it – what are the general recruitment requirements for senior managers, certified persons and other staff?
Application
A candidate must not perform a senior manager function without prior approval from the FCA.
An application for approval should be made by completing the FCA Long Form A. Certified persons and other staff should complete an internal application if they are applying to be an adviser.
Firms could adopt sections 4 and 5 from the FCA’s Long Form A for this purpose.
Reference checks
In order for your firm to carry out its fitness and properness obligations for an SMF role and a certified role, references must be obtained from previous employers going back at least six years.
