Shearman & Sterling LLP | FinReg | Banking Standards Board Publishes Good Practice Guidance on Regulatory References
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  • Banking Standards Board Publishes Good Practice Guidance on Regulatory References

    The Banking Standards Board has published a statement of good practice for firms when providing and requesting regulatory references in accordance with the Senior Managers and Certification Regime. The SM&CR for banks and building societies was established in 2016 to improve management within banking sector firms. The regime includes a requirement for firms to request references when determining whether a candidate is suitable for a senior management function, certification function or non-executive director function. The BSB's guidance focuses on good practice for U.K. banks and building societies considering references for certification function candidates, although it may also be helpful when reviewing references for SMF and NED candidates. The guidance imposes no legal or regulatory obligations on firms and is intended purely as a support tool for adherence to the regulatory reference regime.

    The BSB's guidance stresses that references should be fair, proportionate and consistent. It goes on to set out good practice for firms when providing regulatory references, prompting them to consider two key questions when they receive a reference request: (i) who is the request from i.e., is it legitimate or could it be a "fishing trip" enabling a third party to obtain information about a candidate without a definite job offer; and (ii) what is being requested and is all the information required for the purposes of the regulatory reference. The guidance also provides that firms obtaining references should be prepared for the process to take some time, and suggests steps they may take to mitigate delays, including providing a brief explanation of the background to the request and establishing a regulatory reference email address so there is a central point of contact within the firm. Finally, the guidance advises firms how to deal with candidates with a more complicated background, for instance where references will need to contain adverse information about an individual or where the individual is in the midst of a disciplinary process. 

    The latest guidance represents the fourth item in the BSB's suite of good practice guidance for the SM&CR.

    View the BSB's Guidance on Regulatory References.

    You may also like to view our Client Note, ' The UK's Expanded Senior Managers and Certification Regime: Key Issues and Action Plan for Brokers, Advisers and Asset Managers'. 

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