Steven Francis Discusses New Requirements Under FCA’s Misconduct Rules With Law360

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London insurance partner Steven Francis commented on the Financial Conduct Authority’s new non-financial misconduct rules in an article for Law360.

According to the article, the rules require non-bank financial firms to provide more details about non-financial misconduct. Companies must provide such information when employees move between certain regulated-sector jobs. Francis warned that he expects more claims from employers that hired problematic staff may argue they would not have done so had the former employer provided accurate information.

"The main issue I believe will be the hours of discussion that situations will cause over issues that were not a focus a few months ago," Francis said. "But I have a feeling that is what the FCA expects — anxiety on behalf of authorized firms to get the balance right — because the objective, of removing troublesome individuals from the industry, is deemed worth the effort."

Francis further noted that employers who lack the HR resources needed to track grievance and disciplinary outcomes and produce accurate records when giving a reference would face problems, adding that companies should not use regulatory references to retaliate over workplace grievances or pressure employees into settling disputes on favorable terms. Instead, he argued companies should document why the information was drafted as it was.

"If I had one recommendation to such firms, it would be to keep the reference as factual as possible and consult the employee concerned," Francis said.