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Financial services regulation has traditionally been shaped by the need to prevent financial misconduct.
That focus is still important but it is no longer the full story.
The FCA’s recent position on non-financial misconduct reflects a wider shift in how risk is understood. Increasingly, regulators are recognising that harm does not only come from fraud, market abuse or financial crime. It can also come from workplace behaviour, poor culture and failures of judgement.
For firms operating under SM&CR (Senior Managers and Certification Regime), that raises a more difficult question: how do you identify the kinds of conduct risks that do not always appear in formal records?
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Traditional checks still matter, but they have limits
Most firms already have an established screening process. Criminal record checks, regulatory register searches, sanctions and PEP screening, employment history checks and qualification verification are all standard parts of due diligence.
Those checks remain important. The problem is that many of the behaviours now drawing greater regulatory attention may never show up in those sources.
Bullying, harassment, discrimination or internal conduct concerns may not lead to criminal charges. They may not be disclosed in a basic employment reference. They may not appear on a public register at all.
That means traditional screening can tell you a lot, but not always enough.
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The gap between formal records and real risk
This is where many firms are starting to feel the pressure.
On paper, a candidate may appear low risk. But if the firm’s screening process relies only on formal records, it may miss the kinds of behavioural concerns that can later create cultural, reputational or regulatory problems.
That does not mean firms should move into guesswork or overreach. It means they need a framework that is broad enough to support better judgement.
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Why references still matter
Under SM&CR, six years of regulated employment references remain a key requirement for certain roles.
These references are designed to help firms identify previous conduct breaches, disciplinary findings and regulatory concerns. In theory, they should provide important context.
In practice, they can be limited. Many employers keep references brief and tightly worded. Some provide only basic confirmation of dates and role titles. That can make it difficult to spot patterns of behaviour or understand the full picture behind a candidate’s history.
So references remain important, but they work best as one part of a wider assessment rather than the whole answer.
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Reputational risk is now harder to ignore
Another reason firms are widening their approach is the growing role of reputational risk.
Professional behaviour does not exist in a vacuum. Public commentary, online disputes and wider digital visibility can sometimes raise concerns that traditional screening would never surface.
That does not mean every online comment should be treated as evidence of risk. It does mean firms are increasingly aware that conduct and judgement can show up in places that were once seen as outside the boundaries of screening.
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What a broader framework looks like
The strongest approach is usually the most structured one.
Rather than relying on a single source, firms are building screening frameworks that combine identity checks, criminal record screening, six-year referencing, sanctions and PEP screening, qualification checks and, where appropriate, reputational or behavioural risk review.
Used together, those checks help build a fuller picture and reduce the chance that key issues are missed.
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Consistency matters as much as coverage
One of the biggest benefits of a structured framework is consistency.
Fit and proper decisions will always involve judgement. But when the same checks are applied in the same way across candidates and roles, firms are in a stronger position to show that decisions are fair, documented and aligned with regulatory expectations.
That matters not just for internal governance, but also if those decisions are ever challenged or reviewed.
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What comes next
As the FCA continues to focus on culture and non-financial misconduct, firms will need screening processes that go beyond box-ticking.
The issue is no longer whether financial crime checks are enough. It is whether the overall framework gives firms enough evidence to make sound decisions about integrity, conduct and suitability.
That is where screening is heading, and where many firms now need to catch up.
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