Certification Failure: what to do if you don t want to certify an individual

Transcription

1 Certification Failure: what to do if you don t want to certify an individual Paul Griffin, Partner: Head of Employment and Labour, London Imogen Garner, Partner: Head of Buy-side Regulation, London Norton Rose Fulbright LLP 29 January 2019

2 Certification: A high level overview A replacement of the Approved Persons Regime A new way of dividing up firms into different buckets of individual accountability An outsourcing by the FCA to firms to approve some employees A new culture of conduct for all employees Senior Managers (including NEDs who hold certain chairs) Certification Staff = Significant Manager Function employees + Material Risk Takers Conduct Staff = Employees other than ancillary staff who perform role not specific to financial services business Employees involved in the provision of ancillary services only (e.g. receptionists, security guards and cleaners) 2

3 High level principles of the regime for Certification Staff? Questions you should be asking yourself Am I acting with integrity and displaying the right behaviours? (essentially means doing the right thing ) Am I acting with due skill, care and diligence and conducting myself properly and in accordance with all applicable laws and regulations? Am I being open and cooperative with the FCA, PRA and other regulators? Am I paying du regard to the interests of customers and treating them fairly and am I focussed on customer outcomes; are customers at the heart of my department? Am I observing proper standards of market conduct? Am I taking reasonable steps in all aspects of my role, including recordkeeping and evidence gathering for compliance and auditing, escalating observed non-compliance within or outside the organisation (a no surprises approach)? Am I complying with the Firm s Fit and Proper Policy at all times? 3

4 Being certified In essence, it means that if you carry out a role that requires certification (the Firm will tell you if you do), you must have a valid Certificate issued by the Firm to you for your role. The FCA no longer approves you, the Firm does. If you do not have a valid Certificate, you cannot work! There are a few limited exemptions: The Firm s regulator, the FCA, allows non-uk staff to do certified roles when they are in the UK provided they are chaperoned by a certified employee. This only applies for a temporary period of up to 30 days in a 12 month period The Firm s regulator, the FCA, allows non-certified staff to provide emergency cover (e.g. holiday cover, sickness cover) for certified staff for a grace period of 4 weeks. This does not apply though where the certified role has T&C (training and competence) requirements attached to it. In order to have a Certificate, you need to be continually fit and proper to perform that role. As well as being fit and proper, you also need to comply with the Conduct Rules set by the FCA. 4

5 Failure to certify Potential issues Change in relationship between management/hr and staff Not engaging with appraisal process could mean failure to certify How the disciplinary process is conducted is important to ensure fair reason for dismissal Settlement of proceedings effect on future employment Potential employment claims by employees Breach of contract Unfair dismissal Discrimination and harassment 5

6 Failure to certify On recruitment Breach of contract: Has the employee been offered a contract? What loss has the employee suffered? Ongoing Breach of contract following dismissal for failure to certify Does the contract state that continued employment is conditional on certification? Is there breach of implied term of mutual trust and confidence? Is there breach of any express term e.g. failure to follow contractual disciplinary procedure? What loss has the employee suffered? 6

7 Failure to certify Ongoing Unfair Dismissal following dismissal for failure to certify Does the employee have requisite continuous employment 2 years? Has the employee been dismissed for a fair reason Misconduct: Fraud or other misconduct including harassment etc Lack of capability: Capability must be related to the work that the employee was employed to do job description and performance management arrangements important Some other substantial reason: Regulatory concerns lead to pressure not to certify Has the dismissal been carried out in a fair manner? Aligning disciplinary process and certification process 7

8 Failure to certify Disciplinary process: Regulatory v Employment issues Conducting interviews Right to be accompanied Sections Employment Relations Act 1999 statutory right to be accompanied at a disciplinary hearing Trade union representative or fellow worker Legal representation at hearing? Right in the contract Legal right under Human Rights Act 1998 where the outcome would have a substantial influence on a decision by regulatory body which may result in inability to continue in profession? Waiver of privilege over investigation report to carry out fair disciplinary process /defend ET claim 8

9 Failure to certify Settlement Settlement Agreement (s203 Employment Rights Act 1996) Strict conditions apply Employees more likely to proceed to Employment Tribunal to protect reputation and future employment (NB no fees in Employment Tribunal) Use of Non-Disclosure Clause in Settlement Agreement Regulatory References regulatory reference rules limit an employer s ability to agree a form of reference in a settlement agreement. Firms must not enter into agreements or arrangements that conflict with the rules (FCA Handbook SYSC R; PRA Rulebook Fitness and Propriety 5.3). Difficulty where disciplinary process has not been completed Announcements Agreed form 9

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