New staff member?

I can’t get over my surprise at the level of trust firms show in people who are relative strangers to them.

I’m talking about new recruits, and particularly about staff who are proposed to FCA as holders of controlled functions. In smaller firms, which lack dedicated HR functions, it’s all too easy to lapse into poor practice and not carry out thorough due diligence on appointment. “We’ve known him for years … he worked at Megabank … what use are references anyway?” are oft repeated refrains.

And whilst there’s always an element of truth in these nostrums, it usually ends up badly for the firm. This is especially so when the employee has been less than frank with their new employer about some past misdemeanor which they thought / hoped had been forgotten, but which still lies on a file at FCA.

At that point the focus moves away from the employee and on to the employer, and why they failed to carry out adequate due diligence at appointment. Statements such as “I’d worked with him previously” will cut little ice.

Of course the recruitment procedures need to be flexible and take account of the appointee’s circumstances. There’s little point in seeking a reference (assuming you can get it) for part time bar work done by a new graduate. But if you decide to skip that stage, you must be sure to make a file note that details why you decided so and what risk (if any) the firm incurs by so doing. Otherwise your recruitment file will look alarmingly thin.

Dumping Data

It sometimes seem that FCA has no concept of the work involved in meeting its data requests.

What FCA assumes should be routine information, easily accessed and sent to them, is in fact new analysis for which the firm has had no previous need and requires some man hours effort to prepare.

Given this, FCA’s recently released document “The FCA Data Strategy – How we will manage and use the data we collect” (released this September) is helpful. It states that FCA must “clearly specify” the data it needs in the context of objectives and priorities. “Data requests will be clear and unambiguous”, they say.

So, if you’re in receipt of a request for a welter of information that seems ill-thought out, you should be able to go back to FCA to ensure that they are indeed being “clear and unambiguous”. Irrelevant information is no help to them and time-consuming for you to prepare.

Fun Managing Funds

Any firm which manages a fund should by now be considering their application to FCA for a variation of permission to allow them to act as the Manager of an Alternative Investment Fund.

The forms are downloadable from the FCA site, and those for both small and full scope AIFMs are similar in content.

But the key to successful application is timing. Although the deadline for firms to achieve the relevant permission is not until April 2014, FCA has made clear that it will need three months to consider the application. That means that firms should be looking to submit to FCA by the end of the year.

This should be achievable for firms that meet the criteria of a “small” AIFM. However full-scope firms – or firms that are close to the threshold requirements and have not been looking at this – may struggle to meet FCA’s timetable.

Fulcrum Compliance has assisted clients in their successful application to FCA for this new permission. If you’d like to discuss this further, get in touch with us – soon.


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