FCA and PRA Fitness and Propriety requirements
Produced in partnership with John Drabble of Kemp Little LLP
FCA and PRA Fitness and Propriety requirements

The following Financial Services guidance note Produced in partnership with John Drabble of Kemp Little LLP provides comprehensive and up to date legal information covering:

  • FCA and PRA Fitness and Propriety requirements
  • Overview
  • SM&CR
  • APR
  • FCA—fitness and propriety (FIT)
  • PRA—fitness and propriety
  • Assessing the fitness and propriety of Notified NEDs
  • Fitness and Propriety issues relevant to both regulators:
  • Financial soundness
  • Ongoing fitness and propriety
  • more

Overview

The Senior Managers & Certification Regime (SM&CR) is the Financial Conduct Authority’s (FCA) and Prudential Regulation Authority’s (PRA) framework for regulating individuals in the financial services sector. The SM&CR applies to all PRA and FCA dual-regulated firms and the majority of FCA-solo regulated firms (together, SM&CR firms). The Approved Persons Regime (APR)—under Part V of the Financial Services and Markets Act 2000 (FSMA 2000), the predecessor of the SM&CR, continues to apply to appointed representatives and to those FCA-solo-regulated firms which carry on the activity of benchmark administration (and no other regulatory activity) (together, non-SM&CR firms).

Both SM&CR firms and non-SM&CR firms are required to assess the fitness and propriety of individuals as a precursor to permitting them to carry out certain roles, and on an ongoing basis. This assessment is commonly referred to as the ‘fit and proper test’. In respect of certain senior roles, firms are also required to obtain regulatory approval prior to permitting the individual to carry out a role; under FSMA 2000, s 61(1), the regulators will only grant an application for approval if they are satisfied that a candidate is fit and proper to perform the relevant function. The burden rests on applicant firms to convince the regulators that individual candidates are fit and proper.

In determining whether or not an individual