DBS Checks & Background Checks for SMCR Compliance

DBS and background checks are a fundamental part of the Senior Management and Certificate Regime (SMCR). They are the only way for your firm to prove you have properly assessed the fitness and propriety of your staff. Carrying out the right checks can be the difference between your firm being compliant or not. Be confident in your compliance with our tailored SMCR screening packages.

 

DBS Checks For FCA Compliance

DBS Checks are a mandatory requirement under the FCA’s Senior Management and Certificate Regime. FCA regulated firms need either Standard or Basic DBS Checks, dependent on the staff members role. 

Standard DBS Checks are mandatory for any employee who is carrying out a Senior Management Function (SMF). This level of DBS Check will search an applicant’s criminal record history for cautions, warnings, reprimands as well as spent and unspent convictions.

For all other employees, a Basic DBS Check is recommended. This level of DBS Check includes a search of the Police National Computer. It will search for any unspent convictions or conditional cautions the applicant may have.

 

Fitness and Propriety

Fitness and Propriety is the benchmark set by the FCA to assess people’s suitability to perform certain roles.

The FCA will only approve an individual to carry out an SMF once they are satisfied they are fit and proper.

However, firms need to satisfy themselves that applicants for SMF roles meet this benchmark before submitting an application to the FCA. Background checks are the only practical way to achieve this.

The three key areas firms must assess are:

  • honesty

  • competence and capability

  • financial soundness

A comprehensive breakdown of these areas can be found in the FCA handbook.

Background CHecks for SMCR

To be able to evidence that your firm has assessed a candidate to this benchmark, background checks are essential. The FCA recommends the following checks:

  • Regulatory Reference Checks

  • Qualification Checks

  • Adverse Financial/Credit Checks

  • Directorship Checks

  • Criminal Record Checks (DBS Checks)

The information provided by these checks would be the minimum expected for an application for an SMF-approved person.

Other useful checks include: International Civil and Criminal Record Checks; Sanctions Checks; Occupational History Checks; and, FCA Checks.

For our comprehensive recommendations, check out the table below.

Which Checks Should I Be Doing For SMCR?

Under SMCR firms need to be able to produce evidence showing they have sufficiently assessed the fitness and propriety of staff. The FCA doesn’t name any checks specifically, but there are certain things that need to be checked.

Our experts have produced the below table to help explain which checks are needed and when they should be carried out.

 
 

Why Personnel Checks?

The Senior Management and Certificate Regime is complicated enough before you even consider background checks. Getting things wrong could leave your organisation liable to problems with the FCA. Working with a partner that has the expertise to support your firm is essential.

Personnel Checks have spent two decades supporting both public and private sector institutions with their background screening. Our experts know everything there is to know about the screening requirements for FCA-regulated firms under SMCR.

Get in touch today to partner with the UK’s highest-rated background screening firm. We’re ready when you are!

Background Screening and FCA Compliance Ebook

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We examine the mandatory requirements for background checks for FCA regulated firms.

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Frequently asked questions

 

  • The average turnaround time for our SMCR screening packages is around 3 days. However, due to the nature of the checks this can vary significantly.

    Standard DBS Checks on average take between 1-7 days. The Disclosure and Barring Service do stipulate that they can take up to 8 weeks in rare cases.

    Reference Checks can also sometimes slow things down. This is usually down to referring organisations not treating the reference request with as much urgency as they should.

  • The full list of SMFs is as follow:

    • SMF 1 Chief Executive function

    • SMF 2 Chief Finance function

    • SMF 3 Executive Director

    • SMF 4 Chief Risk function

    • SMF 5 Head of Internal Audit

    • SMF 6 Head of Key Business Area

    • SMF 7 Group Entity Senior Manager

    • SMF 8 Credit Union SMF

    • SMF 9 Chairman

    • SMF 10 Chair of the Risk Committee

    • SMF 11 Chair of the Audit Committee

    • SMF 12 Chair of the Remuneration Committee

    • SMF 13 Chair of the Nomination Committee

    • SMF 14 Senior Independent Director

    • SMF 15 Chair of the With-Profits SMF 16 Compliance Oversight

    • SMF 17 Money Laundering Reporting

    • SMF 18 Other overall responsibility function

    • SMF 19 Head of Overseas Branch

    • SMF 20 Other local responsibility function

    • SMF 21 EEA Branch Senior Manager

    The next 5 senior management functions are specific to the insurance sector and are governed by the PRA:

    • SMF 20 Chief Actuary

    • SMF 20a With-Profits Actuary

    • SMF 23 Chief Underwriting Officer

    • SMF 23a Underwriting Risk Oversight (Lloyds)

    • SMF 24 Chief Operations

    • SMF 25 Small Insurer Senior Manager Function

    Individuals are not limited to one SMF. Depending on their role, staff members may cover 2 or more SMFs. For example, a director can perform the director function and also the compliance oversight function at the same time.

  • The Senior Management and Certification Regime (SMCR) was introduced by the FCA to replace the Approved Persons Regime back in 2015.

    The SMCR was designed to tighten the compliance of financial services, strengthen market integrity, reduce harm to consumers and making individuals more accountable for their conduct.

  • The SMCR applies to all firms regulated by the FCA, PRA or both. Guidance on how to classify your firm under the new regime, which can be found here.

    The FCA estimate that around 47,000 firms are subject to the rules described in the SMCR.

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