A recent employment
case led by gunnercooke partners Jonathan Golden and Carol L’Heveder working respectively
on employment and regulatory issues has highlighted the real challenges faced
by senior financial executives when leaving their firm and looking for a new
role. Using their combined experience in this sector, they forced a resolution
of an unresolved disciplinary investigation which would have made it impossible
for the client to secure a senior role in the financial sector.
because most executives in the financial
sector will need a regulatory reference which will be the new passport for working in finance. Without professional advice on the transition
to the new regime, individuals may be left out in the cold without a job. If
you fall into the category of people who will need a regulatory reference, you
may need to think and act now.
SMRC is extending its reach in December 2019 to cover most financial firms. Regulatory references are therefore fast
becoming the necessary passport to landing the next
role. This is because a regulatory reference is an essential
requirement for most roles. It is important
to remember that the roles requiring a regulatory reference will not only
include front office banking or investment roles, but also non-executive roles
and potentially consultancies in the financial sector.
of the regulatory reference is determined by the regulator. It consists of questions regarding fitness and
propriety and past investigations and disciplanary processes to which yes/no
answers must be provided with explanatory comments from the employing firm. As the references usually cover the past 6
years, and because the yes/no regime may result in answers being somewhat blunt
and out of context, it is important to think beyond the immediate next role and
get an unqualified reference that will stand the test of time, as well as
further role changes.
is particularly acute when a departing employee has unresolved disciplinary or
conduct issues. Today, the employing firm
does not have a strict obligation to resolve outstanding issues before an
employee departs (although it must treat employees fairly). This means employees should be proactive about
addressing any outstanding issues they may have whilst still employed at their
firm and, if necessary, put pressure on the employer to resolve them clearly
and in writing before leaving or before promotion, given the importance
of the reference in ensuring future roles.
In this recent case, the right outcome was based on several factors which are likely to be relevant in most cases. These included (1) vigorously defending any allegations made against the employee in or prior to a disciplinary meeting (and not giving up); (2) assessing the firm’s policies and raising a grievance if the employee has been treated unfairly in the disciplinary or a whistleblowing claim if justified; (3) identifying the FCA senior manager(s) to whom the matter can be escalated if there is no, or an unsatisfactory, resolution; and (4) finding a balance between financial compensation and the benefit of an unqualified regulatory reference (because even if downgraded to a performance matter, any internal investigation findings may still have financial consequences on variable pay and benefits).
Financial institutions are increasingly constrained by the regulatory system generally and also in connection with the new regulatory reference, and so will find agreeing announcements and settlement agreements more challenging. As employment and financial regulation experts working in tandem, we can advise and usefully help departing employees navigate this minefield for the best outcome possible. Carol L’Heveder and Jonathan Golden have successfully done this on several occasions and most recently obtained an unqualified regulatory reference, full redundancy monies and grossed up cost.
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