Sandy McGregor, Director of Policy, Simplybiz

The concept that staff should be fit and proper to carry on the role they are employed to do is one of the fundamental pillars upon which regulation has been build. Without it, there is a real risk to both consumers and the integrity of the UK financial system. Over the past five years, this requirement has been embedded into firms’ practices via the Senior Managers & Certification Regime( SM & CR). Anyone within a firm who is performing a Senior Manager Function, a Certification Function or the role of a Non-executive Director, will be subject to specific Fit and Proper rules.

What are the Fit and Proper requirements?

The SM & CR introduced a host of new rules and guidance which firms must follow, based on three familiar concepts:

• Honesty, integrity and reputation

• Competence and capability

• Financial soundness

Firms need to gather evidence to demonstrate their Senior Managers and Certified Persons are fit and proper for their role; and that they meet requirements of honesty, integrity, and reputation, financial soundness and competence and capability. This requires firms to annually certify these staff as Fit and Proper and have evidence to support this process.

For advisers subject to the Certification Regime

For those staff that fall under the Certification Regime, typically advisers carrying on an activity that requires a qualification, once a firm is satisfied that its certified person is fit and proper, they must be issued with a certificate which is reviewed annually. A firm should only issue a certificate when it is satisfied that the person is fit and proper to perform the Functions to which the certificate relates.

The certificate will confirm the person is fit and proper to undertake the role( s) specified within it and should be for a period of no longer than 12 months.

The requirement to show ongoing competence and capability can be framed around many of the regulatory themes that have been front and centre throughout 2024 and into 2025:

• reviewing the quality of advice, with a particular focus on at and in retirement advice;

• adherence to the firms training and competence plan;

• the timely delivery of ongoing service responsibilities, to the quality expected of the firm;

• the outcome of feedback data collected as part of ongoing Consumer Duty monitoring; and

• supporting customers with vulnerable characteristics

14 | The Adviser