Regulators, firms and professional bodies urged to work together to close information loopholes

By Lora Benson | Oct 18, 2017


A tri-partite financial services professional bodies’ Alliance is urging regulators and firms to work more closely with professional bodies by closing information loopholes, which will ultimately help prevent “bad apples” from re-circulating within the industry.

The Chartered Body Alliance (The Alliance) response to the Banking Standard Board (BSB) Consultation on Certification and Risk has broadly welcomed the proposals for further guidance supporting fitness and propriety assessment of individuals. But it has called on the BSB to take specific action and tighten up its proposals in four key areas:

Consider possible professional membership issues that may call into question an individual’s fitness and propriety
The Alliance note that the BSB guidance has missed two possible sources of information which firms should consider when assessing fitness and propriety; a) whether the individual is in breach of other conduct rules, such as those of their membership body, and b) whether a professional body or regulator has made the decision not to issue an individual’s Statement of Professional Standing (SPS). Both of these factors may influence a firm’s decision as to whether the individual is ‘fit and proper’, and indicate whether remediation of the issue is necessary.

As such, the Alliance calls upon the BSB to expand their guidance on considering “reputational impact” to include a specific reference to any professional body to which the individual belongs, and insert ‘decision taken to not issue an SPS’ into the factors to consider when an issue “could be remediated”.

Closing the information loophole
Regarding communications outside of the firm, the Alliance suggests that the BSB guidance has overlooked a key part of the process. The Alliance suggests that the guidance could be enhanced by advising assessors (and through them, individuals) of the value of sharing results of a “certification decision” with the appropriate professional membership body to “close this information loophole”.

These certification decisions are the annual checks which firms have to make of bankers to prove they are fit and proper to perform their job functions. The Alliance states that: “We would argue that we (professional bodies) have a vested interest if there are concerns about the actions of a member, as this can significantly influence the perception of our wider membership and the profession as a whole.”

“This might lead to a disciplinary review, but, as is intended through the guidance to employers, it provides us with the opportunity to analyse trends or areas of common concern emerging amongst our membership and take steps to address this,” says the Alliance.

Organisational support for professional development
The Alliance supports the BSB’s guidance that individuals should take personal responsibility for all aspects of their own professional development and that they should be recognised by their firms for that.

However, the Alliance stresses that those involved in these assessments should “actively direct, encourage and support those who seek to take steps, such as taking a professional qualification or joining a professional body. Too often budget constraints are used as an argument in offering this kind of support.”

The Alliance cites a recent study commissioned by the Chartered Banker Institute which found that professionally qualified bankers have an extremely high level of professional pride in their work, compared to their non-qualified counterparts.

Simon Culhane Chartered FCSI and CISI CEO said: “This consultation from the Banking Standards Board offers a number of opportunities to further enhance the relationship between firms and professional bodies. In particular, we recommend that firms (and the BSB) should encourage individuals to hold a relevant and appropriate professional qualification, be a member of a relevant professional body, comply with a professional Code of Conduct and complete relevant, audited CPD (Continuing Professional Development) annually.”

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.”