Financial workers sail through UK’s fit and proper tests |
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Financial workers sail through UK’s fit and proper tests

Published on Monday, 15 Apr 2013
Britain's Financial Conduct Authority has adopted stringent screening procedures for the most risk-sensitive finance jobs.

LONDON - Britain’s financial regulator has blocked just 30 out of a possible 227,000 applications to the sector’s most risk-sensitive jobs in the six years since the banking crisis erupted.

New figures seen by Reuters show the renamed Financial Conduct Authority (FCA) rejected an average of one appointment for every 7,566 proposed by banking, insurance and other finance firms under the terms of its 'approved persons' regime between April 2007 and the end of 2012. 

Regulators overseeing London’s financial industry have been at the forefront of a Europe-wide drive to increase professional standards by scrutinising candidates slated for key roles, in a bid to ensure they have the requisite skills to do their jobs. 

Members of the financial community said the rules, tightened in late 2008, would impede company hiring plans and 1,850 of the 40,997 candidates put forward in the year to April 2009 voluntarily withdrew applications for approved status.
But the new figures show the numbers of people withdrawing from assessment have fallen sharply, while rejections from the FCA have remained negligible.

Will Pomroy, corporate governance policy adviser at the National Association of Pension Funds, said he hoped the small number of failed applications reflected more robust assessments of staff competence, capability, honesty and integrity at company level. "Investors expect the board to take responsibility - and be accountable - for setting the culture from the top and ensuring it filters down throughout the workforce," Pomroy said. "They would not want to be relying solely on the assessments of the regulator for each individual employed in a controlled function - of which there a large number." 

But others said they drew less comfort from the figures, suggesting that rejections might have fallen because staff were being coached to pass the tests or giving up promotion prospects because they did not want to risk humiliation, or other consequences, if they failed.

"Think of it in terms of Heizenberg’s Uncertainty Principle or The Observer Effect: 'Directors are like sub-atomic particles, they behave differently under observation'," one industry sceptic said, on condition of anonymity.
The FCA does not break out rejections by year, but annual figures do show the number of applications and withdrawals.

The latest full-year figures show withdrawals came in at just 597 in the year to April 2012, against a peak of 1,850 in the year to April 2009.

"In addition to 30 applications for approval being formally refused since 2007, during the same period, over 7,000 applications were withdrawn after submission - many of which were after close scrutiny by the FSA," a spokeswoman for the regulator said.

The UK's 'fitness and probity' process is one of the broadest in Europe, encompassing senior management and directors, and staff working in compliance, risk and internal audit across all firms authorised by the regulator. 

Most assessments are done in writing but the regulator routinely interviews candidates for the most senior roles in "high impact firms", and carries out other interviews on a "risk-based approach if there are concerns about a candidate or firm", the spokeswoman added. REUTERS


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