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Blog series – International Challenges to Certification: Varying F&P assessment approaches

James Ewing, Head of Assurance, Risk and Planning, Banking Standards Board and Maximilian Weidlich, Policy Associate, Banking Standards Board

This is the second blog in a series on International Challenges to Certification. For more details on the certification regime, read A Look at the Senior Managers and Certification Regime by BSB Executive Director for Assessment and Insights Mikael Down.

In this blog we explore some of the practical challenges to implementing high and consistent standards across a global group for assessing fitness and propriety (F&P). These barriers largely relate to the availability of information in different jurisdictions. In our Supporting guidance on Fitness and propriety definitions, sources of information and assessment record template we set out the range of information a firm might want to consider as part of an F&P assessment depending on the circumstances of the assessment[1]. This blog explores some of our findings and learnings from working with the BSB’s Certification Regime Working Group.

Baselining local approaches

Firms typically use the UK requirements and information available in the UK as the baseline against which they compare local approaches to assessing F&P and information availability. Principle 8 of the BSB’s guidance on Assessment Principles acknowledges that approaches to the assessment of F&P will need to be consistent with local jurisdictions. Depending on the jurisdiction, firms will need to vary their standard UK approach. Typically, there are three reasons why information may be unavailable:

  • there are legal restrictions that prevent the information from being held or processed;
  • the local infrastructure does not exist to record the information centrally; and/or
  • local cultural norms make the individuals of whom information may be requested less forthcoming.

Practical options to address challenges

Where firms encounter a barrier to obtaining the information they require, they will need to assess the risks of proceeding without this information against the difficulties in obtaining it. Where information is unavailable for any reason, firms can consider whether there is an equivalent source of information that could be used or whether sufficient assurance can be gained via other methods. The diagram below described an escalating approach that firms can use when assessing an individual’s or group of individuals’ F&P in these circumstances.

Diagram

  1. Seeking equivalent information

Where information is unavailable for legal or structural reasons, firms may have to seek alternative information or accept that it is unavailable and consider what further action may be pursued. The BSB’s F&P Assessment Principles state that they should seek to identify and use appropriate overseas equivalent sources of information where possible.

  1. Additional self-declarations

Asking the individual to make additional voluntary self-declarations may provide decision-makers with sufficient assurance that the individual understands their responsibility to maintain their F&P in an area where other forms of information may be lacking. However, there might be limitations around asking individuals to make self-declarations in some jurisdictions. For example, it might not be legal to compel an individual to make a self-declaration (and in these circumstances firms should consider informing the individual concerned that such a self-declaration is voluntary) or to take action on the basis of information volunteered in a self-declaration.

  1. Additional controls in post

There may be cases where reasonable attempts to identify and obtain (where it exists) equivalent information fail and that a self-declaration does not provide the decision-maker with sufficient assurance. In these circumstances, firms will need to decide whether they have sufficient information to make an informed assessment of F&P or not and, if not, whether they are prepared to allow the individual concerned to continue to perform the role requiring certification. It may be the case that, where a firm considers it does not have sufficient information, this can be dealt with as a certification risk[2]and put in place additional controls around the individual once in post to mitigate it. Such controls would, of course be reviewed as part of subsequent F&P assessments. This might include putting in place additional supervision on a day-to-day basis, reducing the scope of the role or closer monitoring through scheduling additional in-year F&P assessments.

Download a table with examples of the challenges described in this blog and examples of equivalent sources of information which firms might seek.

[1]Depending on the circumstances of the F&P Assessment, different sources of information are likely to more relevant. For example, at a new role assessment, evidence of education and qualifications may be important. However, these are largely static and historical records and do not need to be considered again at subsequent assessments until that individual moves role again (unless a new professional qualification has been obtained or it subsequently emerges that an individual has been dishonest about their educational attainment or qualifications).

[2]See Supporting Guidance 2: Establishing pass/fail criteria and evidencing the F&P assessment.