The government has made it clear it wants more information on exactly who put Flowers in a position of responsibility. But even without this saga, the Financial Conduct Authority is placing increasing emphasis on ensuring the right staff are in positions of responsibility.
So how can firms select the right candidate for positions of responsibility? And what are the warning signs they might not be up for the job?
For this week’s Marketwatch, our commentators are:
Prolific Mortgage Finance managing director Lea Karasavvas, who argues a professional’s private life becomes relevant when it starts to interfere with their work life
Personal Touch Financial Services marketing director David Carrington, who says the test is whether firms will put their senior staff members in front of clients
Society of Mortgage Professionals corporate development manager Lorraine Cox, who urges firms to avoid relying on the regulator to do their recruitment for them
Lea Karasavvas, managing director, Prolific Mortgage Finance
Professionalism in the financial services, and particularly the mortgage industry, is fundamental in my view. Day in day out, we are dealing with the most important financial decision in our clients’ lives, and it is key that our professionalism remains paramount in making such decisions. This extends from brokers and admin staff all the way up to the CEOs of the big establishments.
While product knowledge is a driving factor in our role, so too is the level of trust our clients place in us to deliver on turnarounds, to ensure we obtain the end goal and remove as much stress from our clients as possible.
The private life of any individual is exactly that, private. However, if this starts to impact on the ability to do the job within the working day, when managing client expectations and total focus is required, there could be an argument that details of that individual’s private life are impacting on their ability to perform their job.
Ultimately, everyone must set their own standards, but it is key that these standards match those expected of the public and the client. Otherwise, they risk underperforming. And ultimately, if their eye is not on the ball, it could mean facing a serious complaint.
David Carrington, marketing director, Personal Touch Financial Services
Fit and proper hit the headlines last week, with commentators speculating on how the regulator might step up their checks on senior appointments.
To be fair, the approval process has changed significantly, with many senior appointments now requiring an interview with the regulator. This is a positive step, as qualifications are not generally a reliable guide – it’s not what you do, it’s the way you think. But we do need to ensure seriously good candidates are not put off by a perception that the process is patronising.
At senior level, in any size or type of business, it is less about qualifications and more about relevant experience and the right attitude. But boards should not use the regulator as an executive recruitment bureau. We have to be rigorous in finding the right fit, ensuring our senior appointments will provide a challenge whilst being a tight cultural fit for each business.
A good test is would you be happy to put any one of your senior team in the front room of any client? If you would worry about what they would say – or what they would try and hide – they have just failed my first fit and proper test.
As a network the challenge is magnified, as we are responsible for senior appointments within member firms as well as our team. The same principles of right attitude and culture apply though.
Lorraine Cox, corporate development manager, the Society of Mortgage Professionals
All senior management and staff should naturally go through appropriate recruitment processes to assess their suitability for the role, which in most organisations has been the case for many years.
Nevertheless, HR process and due diligence has become more challenging over the past ten years within retail financial services. The additional measures put in place by the FCA are another layer. The regulator expects effective selection to have been conducted in the first instance before being submitted for approved persons status.
Although the recent apparent failing of due process regarding the appointment of a senior banking official has drawn much criticism, it is important to retain balance. This situation is not the norm across the market. Still, it will understandably sharpen every firm’s focus regarding future appointments.
Professional bodies have an increasingly important role in setting professional standards guiding the profession and providing a code of ethics for members to subscribe to, which in turn will help build consumer confidence and trust. However, they are not a second tier of regulation. Ensuring the rigour of recruitment due diligence must remain the responsibility of the appointing firm.
