Regulatory figures relating to how companies appoint senior management in the financial sector within the United Kingdom have been the subject of news reports recently, following the high profile matter surrounding the fact that Co-operative Bank had recruited a Chairman with a series of lifestyle matters which would have rendered him not fit and proper for the position had this been investigated correctly.
The crux of the matter, when completing due diligence of this nature, is that it depends on the size of the firm and the overall responsibility of the employee concerned.
Regulators such as Britain’s Financial Conduct Authority will often allow the firm itself to perform such background checks and then document them and retain them on site, therefore, if something needs investigating, the regulator can check with the company that it carried out its duties correctly. If it did not, and a complaint is upheld and the senior employee is investigated and adverse information surfaces, then the company itself may be held responsible for this.
Can ODPs Bring Transparency to South Africa’s FX & Derivatives Industry?Go to article >>
If it is a large firm, however, such as a bank or a big City institution, then quite often the Financial Conduct Authority will often call the potential hire in for interview and conduct its own background checks on the individual, including with the Criminal Records Bureau, to check of a bankruptcy has ever occurred, and to check whether any other circumstances which may render the employee not fit and proper material to operate at the senior level of a financial institution is applicable. Only after these are completed is the firm permitted to continue with the appointment.