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Banks to certify own advisers as ‘fit and proper’

Banks will be responsible for certifying their own advisers as meeting regulatory standards rather than the Financial Conduct Authority under proposals set out today.

Currently, the approved persons regime requires all consumer facing staff within banks and advisory firms to be approved directly by the FCA as having sufficient qualifications and being a fit and proper person.

A consultation paper from the Prudential Regulation Authority and the FCA is proposing senior staff within banks, building societies, credit unions and large investment banks remain directly authorised, while other staff are simply certified by the firm itself.

All staff would still have to meet the same regulatory requirements.

The move is a result of the Parliamentary Commission Banking Standards report which called for reform to the approved persons regime so firms take more responsibility for the fitness and propriety of staff.

The paper says the certification responsibility on firms will apply to individuals in customer-facing roles which are subject to qualification requirements.

It says: “These are roles where the FCA is concerned about the risk to consumers from staff without proper qualifications, and where the FCA would want to make sure that proper checks that these qualifications had been achieved were completed.

“Ensuring that firms check that such staff are fit and proper will also support the Retail Distribution Review and Mortgage Market Review.”



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There are 23 comments at the moment, we would love to hear your opinion too.

  1. E L Wisty (an only twin) 30th July 2014 at 1:07 pm

    Does this not presume that bankers understand the concept of ‘fit and proper’?

  2. Hahahahahaha!

  3. This sounds a bit like taking the word of the controller of a drug dealing operation that all of his employees are honest upstanding citizens and couldn’t possibly do anything wrong!!!!!

  4. Russell Vidler 30th July 2014 at 1:28 pm

    The foxes in charge of the hen house? I often wonder how our industry might look if the regulators were prohibited from employing former bank staff.

  5. Absolute total and utter rubbish, how can this be allowed ? The lunatics have taken over the asylum.

  6. I have some real concerns about this:

    1) Can we trust the banks to actually abide by the rules and not simply authorise people without the correct authorisations?

    2) Where banks are found to be breaking the rules, are there going to be real penalties but in place, for example, loss of bank authorisation to give financial advice or fines that really do hurt as at present the fines handed out are no more than parking tickets.

    3) When is the regulator going to wake up and realise that their friends in the banks do not necessarily have the best intentions for the consumers or effectively have the moral compasses that they should have.

    There are an awful lot of bank directors both previous and current that in my book would not be deemed to be fit and proper if the definition included working for the best interest of consumers and shareholders.

  7. brian weatherley 30th July 2014 at 2:02 pm

    FCA Official:

    “I say Chaps, don’t you realise that if authorisation responsibility is transferred to the Banks, we will need another layer of inspectors to carry out the resulting certification of all Banks that they are acting as we prescribe. I am sorry but that will mean a nationwide inspection programme; very often involving overnight stops ( in first class hotels, of course) and, obviously, motor mileage payment at a particularly good rate if you choose to use your own car and so absolve us from the expenditure of centrally hired vehicles of appropriate quality.”

    “Now then Financier Chap, how much additional levy will we need to impose on the IFA fellows?
    Only 5 % ? I consider that very reasonable not too expensive”

    “Well done everyone. Last one to Newcastle buys the wine I’m orff !”

    Am I being too cynical?

  8. This seems to be based on the assumption that banks can afford the humungous fines whereas others in financial services can’t. In short, it is a revenue raising measure that we should all aspire to, i.e. charging more for doing less.

  9. In the words of a well known Scottish philosopher ….. aye right!!!!

  10. Alasdair Sampson 30th July 2014 at 2:15 pm

    As inherent and obvious design flaws go, this is a gold medal winner.

    Have the regulators learned absolutely nothing since 2008? [That is a rhetorical question in case some regulator isn’t able to spot the obvious].

    Pray do tell us, FCA and PRA, who will qualify as “senior staff” within the banks as having the qualifications, experience and authority – to say nothing of their own fitness and propriety – to certify less senior client facing staff as “fit and proper”?

    Where were these paragons of regulatory virtue during the periods before and after 2008 when their client-facing underlings were merrily engaged in miss-selling of hedged loan agreements, PPI, and non-status mortgages to name but a few.

    Quis custodiet ipsos custodes? As we layers like to say.

    God help the public – they will get royally ripped off by the banks yet again.

    Hey ho – wearing my hat as an investment claims manager I can see a never ending stream of claims and complaints against banks stretching into the distant future.

  11. Was it Life on Mars or Ashes to Ashes in the 80’s? Either one, a step backwards into the Dark Ages.

    If you’ve ever tried to get a detailed reference for anyone you’re thinking of employing, the lack of honesty and the fear of being sued or spending a fortune on litigation is so great, what assurances will there be that a ‘bad apple’ at one of the banks can be prevented from getting another job when they’ve created chaos in the role they’ve just left?

    Whatever is wrong with personal accountability?

  12. You couldn`t make this up !!

  13. Does this also mean then ? that any Appointed Rep (AR) will cease the need to be “Approved” ? why just the banks etc etc ?

    I think the approved regime is good, this again just makes a mockery of the whole thing

  14. Russell Vidler 30th July 2014 at 2:54 pm

    Foxes in charge of the Hen House? I often wonder how our industry might look if the regulators were prohibited from employing former bank staff.

  15. Royston Fielding 30th July 2014 at 3:08 pm

    Oh, OK then
    Does everyone involved in regulation of financial services in this country consider that we’re all thick?
    Just ask PPI claimants – billions paid back because banks CAN’T keep themselves in order and had to admit that they were wrong all along
    Just ask LIBOR victims – same sort of reason – greed greed greed
    plus a host of other misdemeanours, all perfectly documented in all forms of media
    And whilst salaried staff are under huge pressure to hit targets, the status quo will prevail
    Nothing has changed here
    And remember, without change, there can be no change….simples !

  16. I know banker bashing is the latest sport, but this move from the FCA flies in the face of their own statements, those of the TSC and latterly of Mr Carney.

    It would seem that general consensus is that banks per se are some way from being fit and proper.

    Is this just the regulator hiving off its responsibility so that when (if) anything goes wrong they can say it wasn’t their fault?

  17. Rarely have I seen such consistency in response to an article. That would normally be noteworthy except, it’s all so bleedin’ obvious, isn’t it!

  18. David Cathcart 30th July 2014 at 6:48 pm

    Is this Aprils fools day – Who at the PRA or FCA thinks this a a sane idea.
    Remember LIBOR rigging, PPI mis selling, PPP mis selling, mortgage hedge product mis selling etc etc etc

  19. It seems bizarre that Banks who regularly negotiate fines ( and in the case of LloydsTSB repeated fines – who still have not paid out their PPI claims even under instruction of the FCA ) – should ” certify their advisers ” as fit and competent. IFA’s who wish to be ” authorised ” are required to complete Level Four ( or 6 ) – and demonstrate ” Competence ” . IFA’s need to meet stringent Rules under which they operate. Banks and insurance companies can employ the most dangerous and unqualified incompetents available – attracting them with huge salaries and bonuses and pension payments – attractive share incentive directly related to their ” results “. How can the FCA possibly condone such a strategy – which makes NO SENSE and offers legalised incompetence and direct sales to foster further policy churning by Banks – or continued delivery of other forms of Endowment sales ( with their inherent fiddling – permitted condoned and allowed to continue by Directors ). Internal cover up by so many companies being bought eg Scottish Widows Clerical Medical, St Andrews Life Halifax C & G etc., and their internal problem solving by churning polices – and pensions sometimes called ” Consolidation “. I refer to such inherent internal fraud as being consolidation for the purposes of Rogue Trading ” Putting the CON in consolidation ! Engineered under the current Government and its regulator one might consider this as putting the CON in Conservative ? The Outcomes for clients of these financial institutions – is FRAUD Pays . it pays the Con Men and Women who direct and who operate these strategies – through to the Fines – which fund Government and Government departments such as the FCA . Like Auto Enrolment it is a TAX . . .a TAX on business permitted by the Government covered up by the Government and permitted to continue . . . .to conduct FRAUD against the voting public . IE everyone in the current UK Plc.,

  20. E L Wisty (an only twin) 31st July 2014 at 9:31 am

    As the article says, this is a consultation paper.

    Therefore, I trust that the dismay and disbelief, universally voiced by us sage individuals, will echoed by consumer bodies and other worthies in their responses.

    Furthermore, there must be a clear demand that, if this hare-brained scheme turns in a widely-envisaged car crash, someone senior at KGB Central will take the can for it.

  21. As previously commented, the universal response to this proposal speaks for itself. The matter which causes almost as much concern as the proposal itself is, how can the regulators be so divorced from public and professional opinion? Banks now build in fines as a business expense, misdemeaners still pay, as with PPI, the money made by the banks in commission is still several times the amount which they have had to repay. Every day brings additional disclosures of banks unethical conduct and Ross MacEwan has already flagged up that RBoS will be in the headlines again in the future, so expect more fines. All the time Bank’s are retirement homes for regulators, things will never change.

  22. Because they have had such a good record in the past.

    Sell out by the Government.

  23. I thought this was referring to senior persons in banking and not investment advice or have I missed something. I csnt see how you can have approved persons for investment advice listed individually for non banking while not listed at all and handeled internally by the banks? Is that what the report link is suggesting or have I misread the linked report in the article (I have only skim read it)

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