Avoid delays by preparing a full and complete application to perform a senior management function (SMF).
What to consider before you apply
Select candidate
Complete your own checks
What you need to disclose
Ready to apply
Before applying, firms must:
- Review the application form and check you have all the required information.
- Conduct your own checks – to be confident the candidate meets the requirements of our 'fit and proper' test.
- Check the candidate has the appropriate time to discharge their responsibilities (see our case study on capacity and stretch).
- Be ready to fully disclose all relevant information in the application.
- Prepare all the relevant information to submit a full and complete application.
If you aren’t sure whether something may have an impact on a candidate’s fitness and propriety, you should disclose it.
1. Select the right candidate
Selecting the right SMF candidate, whether internal or external, is an important decision that depends on several factors.
It is important your firm selects the right candidate who:
- Is fit and proper.
- Meets the needs of your firm based on talent available, culture and strategic goals.
You might consider internal and external candidates.
While an internal candidate will be familiar with your business, external recruitment can bring a wider talent pool, fresh perspectives and help your firm benchmark against the wider market.
For some firms this may include individuals currently based overseas or working in other industry sectors.
Greater diversity and more inclusion can improve outcomes for consumers and markets by:
- Reducing group think.
- Supporting healthy work cultures.
- Unlocking diverse talent.
- Improving understanding of and provision for diverse consumer needs.
Read about the work we’re doing to drive change
Make sure your application includes evidence showing how you have reached your decision.
Read our case study on candidates based overseas
Using a third-party
Many firms find it helpful to use an adviser or consultant to help prepare applications, or to get ready for meetings or interviews.
As the firm applying to us, we expect to deal directly with you in correspondence and meetings, not your adviser or consultant.
Your firm must sign the application form and be:
- Accountable for the SMF application.
- Able to explain all the material in it.
12-week rule
Sudden and unexpected absences do happen.
If an SMF role becomes vacant temporarily or unexpectedly, an individual can provide cover without approval for up to 12 weeks.
They do not have to be a senior manager. For example, they might be deputy to the absent SMF holder.
However, this is only an interim measure. Firms must complete their due diligence and apply for approval of the SMF as soon as possible to allow us (or the PRA) enough time to assess the application.
Keep your succession and cover planning up to date to make sure you can arrange cover quickly if you have an unexpected vacancy. For example, you might consider internal shadowing or training opportunities.
Applications for candidates based overseas
We welcome applications from overseas candidates.
We will assess overseas candidates in the same way as UK candidates.
We consider prior experience, including in international jurisdictions, as part of the overall assessment process.
Our assessment of overseas applicants with relevant experience is likely to focus on other aspects of the prospective role (such as understanding of the UK financial services market and regulatory system).
Assessment times for UK and overseas candidates are similar.
If you wish to discuss a potential application for a candidate currently based overseas, or a candidate who has no prior UK financial services experience, contact us.
2. Complete checks on the candidate
You must conduct your own due diligence before submitting the application; to be confident the candidate meets our fit and proper test. This will reduce the risk of delays.
Fit and proper test
Firms must make sure anyone who will be performing SMF roles is fit and proper to do so.
You must do this before you submit an application and review it on a regular basis.
The main elements to consider when assessing fitness and propriety are:
- FIT 2.1: Honesty, integrity and reputation.
- FIT 2.2: Competence and capability, including whether the person satisfies any relevant FCA training and competence requirements.
- FIT 2.3: Financial soundness.
Find out more in our Handbook: Fit and Proper test for Employees and Senior Personnel (FIT)
Your firm should also consider:
- The nature, scale and complexity of its business.
- Whether the candidate has the knowledge, skills and experience to perform the specific role(s) and responsibilities, and also understands the firm and the market(s) in which it is operating.
If there are gaps, consider how the candidate can quickly build this knowledge. Make sure your application shows how these gaps will be addressed.
You should provide adequate and appropriate evidence to support your application.
For example, we will pay particular attention to any adverse disclosures in the application form when we assess the candidate’s fitness and propriety. This includes disclosures from your own due diligence checks performed before submitting the application, such as information arising from any:
- Credit checks.
- Criminal records checks.
- Regulatory references.
- Directorship checks.
Expand the sections below for extra details on checks you may carry out to assess fitness and propriety.
Financial checks
Before applying, you must establish your own criteria to assess a candidate’s financial soundness.
For example, you may wish to:
- Complete a credit check.
- Review a candidate’s directorships (past and present).
The financial standing of a candidate can reflect on their suitability to perform an SMF role.
Criminal records checks
You must declare if a candidate has a criminal record (to the extent allowed by law).
Most firms should undertake a criminal records check as part of each SMF application, to make sure the candidate has given you accurate and complete information. However, criminal record check requirements vary by firm type.
| Sole traders | Sole traders do not need to get criminal record checks when applying for themselves. |
| Limited scope firms | If the firm has a sole director, no other employees, and no third-party providers, it can provide a basic DBS check. All other limited scope firms must follow SUP 10C.10 requirements. |
| All other firms | If your firm is not a sole trader or limited scope firm, you must follow the SUP 10C.10 requirements. |
Your firm will need to register with the Disclosure and Barring Service (DBS) for England and Wales or the equivalent agencies in Scotland and Northern Ireland, who run the checks.
If a candidate is based overseas or has spent time working or living outside the UK, it may be appropriate to get an equivalent check through the relevant authority in that country or an appropriate overseas regulatory body where available.
If you have not got a criminal record check when you apply, your application may be rejected.
The firm should not send a copy of the certificate to the FCA unless required to do so under SUP 10C.10.18AG or SUP 10C.10.28G.
Find out more about checking criminal records in SUP10C.10.
Criminal convictions
If a candidate has a criminal conviction, you should consider how this affects their fitness and propriety for the SMF role.
Relevant considerations include:
- The seriousness of and circumstances surrounding the offence.
- The candidate’s explanation.
- The relevance of the offence to the proposed role.
- How long ago the offence took place.
- Evidence of the candidate’s rehabilitation.
We will then look at whether the candidate's past behaviour might have an adverse impact on your firm, its customers or financial markets.
For example, if someone has been convicted of a serious driving offence this might be more relevant to a candidate working in the motor insurance industry in comparison to others.
Regulatory references
Your firm must request a regulatory reference from all the candidate’s past employers that cover the last 6 years, in line with SYSC 22 in our Handbook.
This does not apply to limited scope firms if you are a sole trader without employees.
Regulatory references will help your firm decide whether the candidate is suitable for the role.
Each reference should include:
- Details of any disciplinary action taken due to breaches of the Conduct Rules.
- Any findings that the candidate was not fit and proper.
- Any other information relevant to assessing whether a candidate is fit and proper (such as the number of upheld complaints).
For full details on what to include, see SYSC 22.
You should make every attempt to obtain a regulatory reference.
Problems getting a reference
Authorised firms must give your firm a reference as soon as possible after you ask for one, in line with our Handbook rules.
If you don’t receive one, you should:
- Explain to the past employer you’re requesting the reference under SYSC 22 of our Handbook.
- Let us know on the application.
If you still cannot get a reference:
- Explain to us why you haven't been able to.
- Show us through your other checks why you are satisfied that it does not impact the candidate's fitness and propriety.
You’ll need to document full details in your application.
Competency and capability
You will need to show that the candidate has the knowledge, skills and experience to do the role effectively, to a high standard.
These skills and experience can be gained in either other jurisdictions as well as the UK, or other industry sectors.
Firms should consider whether the preferred candidate:
- Has a skillset that matches the job description and its responsibilities.
- Understands (or can quickly build understanding of) the risks associated with your business.
- Has enough time and resources to carry out their duties without being overstretched.
When you apply, tell us how any gaps will be addressed.
Be prepared to show how you have evaluated competence and capability. For instance:
- Validate educational qualifications, certifications and any industry-specific credentials.
- Curate plans accounting for specific individual needs, development areas and timelines.
- Consider and explain how you have mitigated any conflicts of interest for their role.
- Keep records of your own interviews or other discussions where you have assessed the candidate is right for the role.
Learning plans for technical roles in compliance and money laundering reporting
We will pay particular attention to the level of competence and capability of candidates applying to perform the SMF16 compliance oversight role or the SMF17 money laundering reporting officer role.
You may also want to add to the candidate’s training any continuous professional development courses relevant to your firm and the market it operates in.
This ensures the candidate keeps their regulatory knowledge up to date.
Non-financial misconduct
Your firm should also carefully consider any instances of non-financial misconduct committed by the candidate (both inside and outside the workplace), such as:
- Bullying.
- Harassment (including sexual harassment).
- Discrimination.
- Violence.
Directorships
We expect firms to disclose all directorships and partnerships (whether active, inactive, national or international) that the candidate has undertaken over the past 10 years.
It is vital that your firm has done its due diligence on any directorships a candidate holds, to make sure they aren’t overcommitted or conflicted.
We want you to be open and transparent about:
- Any concerns about time capacity.
- Any conflicts of interest and how the firm will manage them (particularly around non-executive directors (NEDs) who have multiple directorships, including non-regulated directorships).
You must provide a full overview of the matters and any evidence to support the application.
Other checks
You should check the FCA Register as part of your assessment of whether a candidate is fit and proper (see SUP 10C.10.20G).
You may also want to consider the following basic checks:
- Companies House check on past directorships and firm’s solvency (accounts).
- Information in the public domain.
- Financial Ombudsman Service.
- Financial Services Compensation Scheme.
You may need to investigate any disclosed matters, to make sure you have no conduct concerns, and get supporting evidence to show why, for example from:
- Insolvency services.
- Administrators.
- Previous employers.
Exemptions for background checks
If you think criminal records checks or regulatory references requirements do not apply to your candidate, explain why in your application (for instance, if the candidate has been with your firm for more than 6 years or lives in a country where it is not possible to get criminal record checks).
Otherwise, we may have further questions which lead us to pause your application – which means a longer wait time for you.
3. What to disclose
It’s important the firm and the candidate are both fully open and honest with us from the start.
You must fully disclose any matters that may impact a candidate’s fitness and propriety. Therefore, you need to consider the evidence and gather supporting information showing why the candidate is fit for the role.
If in doubt, disclose all relevant information, including any misconduct.
Speak to your candidate and get as much detail as possible on:
- Any gaps in their employment history.
- Any disciplinary action taken against them in a previous role.
- All directorships and partnerships (and former directorships covering the last 10 years).
- Anything else that could impact their fitness and propriety.
In the application, you must give us enough information to support any disclosures.
Where you think something you're disclosing about the candidate shouldn't affect their fitness or propriety, explain why.
Having some misconduct or disclosures does not mean we will refuse an application. This depends on individual circumstances.
Disclosing criminal convictions
You must declare if a candidate has a criminal record (to the extent allowed by law). This also applies to overseas candidates.
Once you've carried out your own checks and prepared evidence, you're ready to apply for approval.
