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CISI warns on FCA Approved Persons Register decision

19 November 2017

The Chartered Institute for Securities & Investment (CISI) has warned that the FCA’s decision to abolish the Approved Person’s Register could harm consumers.

In response to the FCA’s consultation as to whether the identity of people performing Certification Functions should be made public by the firms who employ them, the CISI cautioned that firms being asked to supply this information will have to rely on the applicant to provide accurate and complete information on which firms they have worked for.

More importantly, consumers will have no official, central source where they can check that they are dealing with an individual who has the appropriate authority in the firm.

The CISI expressed surprise that the question is only being asked now. In its statement, CISI said the abolition of the Approved Person’s Register was flagged up in the Treasury’s SMCR Statement in March 2016. Many firms expressed their concerns that they would no longer be able to check the applicant’s statement about where they worked, and in what role, against an official source.

In a statement, the CISI said: “The CISI and others were willing to provide the channel for making this information publicly available. However, some firms made it clear that they would only provide the necessary information under regulatory requirement, which was not forthcoming. Since it takes a long time to set up such a database it is likely that a valuable source of information will disappear. Instead a new industry of CV checkers has developed at great cost to firms and inconvenience and delay to individual applications. The public too have been deprived of a single reliable source of information.”

Simon Culhane, Chartered FCSI and CISI chief executive, said: “We are pleased to have the opportunity to feedback on behalf of our members to this important consultation paper. We do believe, however, that the FCA has been particularly slow to understand the full implications of the abolition of the Approved Persons Register, on both firms and consumers. We flagged this up back in April 2016.”

In response to the consultation’s Chapter 6: Fit and Proper Requirements, the CISI also criticised the FCA for proposing that the existing Fit and Proper test for Approved Persons and training and competence rules are sufficient for firms to assess the fitness and propriety of certified persons, with little change.

The CISI commented: “One of the main purposes of the SMCR is to raise the standards of individual personal behaviour and for firms to make a much more diligent assessment of senior managers and certified persons. How can this be done if essentially the same rules remain, which the Parliamentary Banking Commission considered were ineffective, apart from requiring criminal record checks?

Culhane said the issues combined indicated “that there should be a more considered approach all round” regarding the important elements of the consultation paper.

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