In November 2020, the FCA prohibited former Approved Persons Russell David Jameson, Mark Horsey, and Frank Cochran from working in the financial services industry following findings that they are not fit and proper. Each of them had been convicted of serious non-financial offences and had received a custodial sentence.
This prohibition reflects the FCA’s stance clarified in a speech given by Christopher Woolard, the Executive Director of Strategy and Competition at the FCA, on 19th December 2018, in which he stated that
“…. the way firms handle non-financial misconduct, including allegations of sexual misconduct, is potentially relevant to our assessment of that firm, in the same way that their handling of insider dealing, market manipulation or any other misconduct is. This is a message industry needs to hear. After my colleague Megan Butler spoke out on non-financial misconduct in May, we received our highest number of disclosures from whistleblowers. Not just involving issues around gender, but also racism, physical bullying and homophobia.
In fact, over the last 12 months, we have seen a noticeable upturn in reports which concern issues like discrimination and sexual harassment in financial services. Our message to firms is clear: non-financial misconduct is misconduct, plain and simple. While numbers are still small, they point to a striking trend. In 2017 our whistleblowing team received 20 reports of non-financial misconduct. This year we’ve received 64. And our suspicion is we have only scratched the surface”.
Where non-financial misconduct occurs, it can have various significant implications for regulated firms. Most obviously, it will throw doubt on the fit and proper nature of any Approved Persons involved. Where whistleblowing has taken place, the effectiveness of that process may be reflected in the way in which the firm follows up the whistleblower’s allegations. There are likely to be consequences if the firm is asked to provide a regulatory reference in line with SYSC 22. Finally, of course, for most solo-regulated firms there will be Code of Conduct issues as the misconduct, if proven, is likely to constitute a breach of the Code – probably of Rule 1.
If you’d like to know more about how we can help you with your fit and proper assessments, whistleblowing arrangements, provision of regulatory references or COCON breaches, or with any other aspect of FCA compliance, our expert team is here to help.
Contact us today on 0207 436 0630 or email info@thistleinitiatives.co.uk.