The FSA today told company chief executives it remains their responsibility to ensure job candidates for significant roles are "fit and proper", even though it will vet them too.
In a letter sent to the CEOs of 5,000 regulated firms, the FSA explains how its regulatory approach will apply to approving and supervising senior personnel performing significant influence functions (SIFs).
It says it expects firms to bear the full responsibility for who they hire, even though it will also carry out a 90-minute interview with each prospective SIF and effectively has the power to overrule their application.
"An important point to remember is that it is the firm who is responsible for making the application to us for approval of a candidate, and that it remains the firm's responsibility to ensure that the candidate is fit and proper for the role," the letter reads.
In the aftermath of the economic downturn, the FSA announced it would be placing "a great deal of emphasis" on governance and risk management.
It said it would interview all candidates for SIF positions and, in August this year, extended the scope to include people employed by an unregulated parent undertaking or holding company "whose decisions or actions are regularly taken into account".
The letter tells CEOs to engage with the FSA early in the recruitment process and says that, for major firms, this should be at the point of drawing up a shortlist rather than waiting until the preferred candidate stage.
Firms are also urged to provide sufficient information with their applications (including supporting documents such as head-hunter reports) and the rationale they have used to conclude the candidate is fit to proper to perform the role.
It adds applications must be made in a timely manner adding "any failure to engage promptly with the FSA may impede a firm's plans to publicly announce a new appointment".
Graeme Ashley-Fenn, FSA director of permissions, decisions and reporting, says: "It is crucial that, at a time when effective governance has never been more important, candidates have the right levels of competence and capability to perform these senior roles and that they are fully aware of their responsibilities.
"The onus is on firms to ensure candidates applying for influential positions are fit and proper to perform the role.
"Our individually tailored approval interviews will help us assess whether the individual has the right experience and understanding but also whether they will enhance the overall management strength and insight of the firm."
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