FSA Compliant Pre-Employment Screens

Powerchex services are designed to assess the fitness and propriety (FIT) of an individual to perform a controlled function by providing the necessary information to evaluate an individual’s honesty, integrity and reputation; competence and capability; and financial soundness.

"To counter the rising threat of internal fraud firms have tightened their employee vetting procedures. The intensity of vetting varied between firms but did not always apply to both temporary and permanent staff. One firm applied seven levels of screening with the degree of due dilligence tailored towards the seniority of the role. Another firm stated that 8% of potential hires were rejected after vetting."

- Financial Services Authority Firms’ High-Level Management of Fraud Risk Report (February 2006)

Fit & Proper?  - Compliance Monitor (pg 22)

The FSA benchmarks vetting process for financial firms in its Data Security report 2008

One of the most important controls that firms can put in place to prevent data theft and other financial crime is a good standard of staff vetting. There have been many well documented cases of staff either stealing customer data to use fraudulently or sell on to criminals who specialise in identity fraud. Other staff have been threatened, bribed or otherwise coerced by criminals into handing over customer data. So firms must be able to trust that their staff will handle and use customer data securely, in line with relevant policies and procedures. FSA’s Data Security Report 2008

Financial Services and Markets Act 2000

With the introduction of the Financial Services and Markets Act 2000 (FSMA), the Financial Services Authority (FSA) requires the firms it regulates to adhere to stringent recruitment processes.

The FSA states in their Training & Competence guidance that regulated firms should have:

• Adequacy of procedures for taking into account knowledge and skills of potential recruits for the role
• Adequacy of procedures for obtaining sufficient information about previous activities and training
• Adequacy of procedures for ensuring that individuals have passed appropriate exams or have appropriate exemptions
• Adequacy of procedures for assessing competence of individuals for sales roles

The FSA’s statutory objectives

1. Protecting consumers
2. Maintaining market confidence
3. Promoting public awareness
4. Reducing financial crime

To meet their statutory objectives, the FSA expects regulated firms to employ only competent and honest staff, and to screen anyone going into an approved function. This means that certain roles of significant influence and staff who advise customers would fall under the approved persons regime and would therefore have to be approved by the FSA to be fit and proper for their role ...more

Since October 2004 the FSA has been regulating mortgage advice, long-term care insurance, and from January 2005, the sale of general insurance products. As a result, these industries have to undertake similar pre-employment screening checks in order to meet the FSA’s requirements.

How can we ensure on going competence for practitioners? -a view by Ruth Martin, MD of the Securities & Investment Institute