Are you Fit and Proper?

If you’ve read our previous blog about the real cost of a bad hire then you will know that when you fail to screen your employees properly you are putting your business at risk. But what about the Senior Management in your company?

In March 2016 the FCA replaced the Approved Persons Regime (APR) with the Senior Managers Certification Regime (SMCR). The SMCR is a new regime that aims to reduce harm to companies by making SMs more accountable for their competence and conduct.

Every Senior Manager needs to have a statement of responsibilities that states what they are responsible and accountable for. The senior manager must also be fit and proper for the role, but what exactly does fit and proper mean? Well, according to the FCA, in order to ensure an individual’s “fit and proper-ness”, you must consider…

  • honesty (including openness with self-disclosures, integrity and reputation)
  • competence and capability
  • financial soundness

The above assessments, although important, fail to tell you the full story of a person’s motivation, character and personality.

In today’s inter-connected world, most things about you are online, this goes for corporations and their directors. That said, companies nowadays continue just to vet their upper management in the traditional checklist manner, which continues not to work.

In 2011, The Guardian stated “In 2007, nearly half of all fraudsters worked in senior management. While this has fallen to 35%, board level perpetrators increased from 11% to 18% between 2007 and 2011.”

HSBC had to apologise for allowing fraudulent funds to be knowingly processed through their bank by Mexican drug cartels. HSBC’s chief executive of retail banking and wealth management said that he was horrified by what he found. However, it was later discovered that HSBC’s head office in London was aware of the illicit funds travelling through the bank but failed to do anything to resolve the problem.

Also falling victim to bad senior management was Deutsche Bank who was fined £163 million in 2017 for failing to maintain adequate Anti-Money Laundering (AML) controls. Mark Steward, Director of Enforcement and Market Oversight at the FCA, said, “Financial crime is a risk to the UK financial system. Deutsche Bank was obliged to establish and maintain an effective AML control framework. By failing to do so, Deutsche Bank put itself at risk of being used to facilitate financial crime and exposed the UK to the risk of financial crime.”

Whether the role is for an entry level position or as a company director, we at Neotas believe in going beyond the standard checks by delving deeper to ensure that the person is fit and competent for the job. We create a full in-depth report detailing the individual’s education and employment history, as well as looking at all online and media content (both adverse and positive) to give you the full picture.

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