Finance industry groups have banded together to urge regulators to tighten guidelines on banking “bad apples”, amid fears individuals who might not be fit and proper could slip through the net.
The Chartered Insurance Institute, Chartered Institute for Securities & Investment and the Chartered Banker Institute warned regulators and firms to close “information loopholes” in the banking system, in a consultation response published today.
Individuals must be “fit and proper” to work in controlled functions in the UK, as set by the Financial Conduct Authority (FCA), but a lack of information sharing between bodies in different parts of the financial services sector could see firms miss crucial black marks in employees’ records, the institutes warned.
The institutes, under the banner of the Chartered Body Alliance, called for a “consolidated register” of professional affiliations, qualifications and employment history, responding to a consultation launched by the Banking Standards Board (BSB) in July on proposals to change guidelines on fitness and propriety.
The BSB, a private-sector body funded by banks and building societies, does not have any statutory powers, but members including Citigroup, HSBC and Royal Bank of Scotland follow its recommendations, which build on FCA rules.
The new guidelines under consultation would not require firms to take into account professional bodies’ decisions to reject applications for certification. However, the Alliance said this risks firms missing cases where individuals have been thrown out of professional bodies or had applications rejected.
The Alliance suggests firms and professional bodies should share information both ways on whether they have rejected individuals.
Simon Thompson, chief executive of the Chartered Banker Institute said: “Encouraging professional membership and a commitment to professional standards are simple but effective steps to preventing and mitigating risk – and the BSB should use this opportunity to communicate this more widely.”