Here is a selection of key people-related developments for financial services firms to look out for in the year ahead.
For a heads-up on our suggested employment law actions for the wider HR community in 2024, you can watch our short video here: 5 employment law actions for 2024 (youtube.com).
To discuss how any of these changes might affect you and your business, please contact James Green.
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TOPIC TO WATCH
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KEY ISSUES
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TIMETABLE
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SMCR reform
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The FCA and PRA’s response to their joint Discussion Paper on SMCR reform is expected in the early part of this year – focusing on the effectiveness, scope and proportionality of the regime. A response had been anticipated in 2023 but a high number of responses to the paper has led to a delay in publication.
As noted in our update we expect modest reform and simplification rather than a complete overhaul, but likely topics for review include:
- Whether certification staff need to be reassessed on an annual basis, or if a longer period between assessment might achieve the regulator’s objectives
- Some reform of the rules on temporary approvals, in particular the rule that temporary cover for Senior Management Functions is limited to 12 weeks
- Reform or further guidance on regulatory references – the FCA is considering the extent to which regulatory references help firms make better-informed decisions about the fitness and propriety of candidates.
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Look out for the FCA and PRA’s response to their joint Discussion Paper, expected early 2024
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Diversity & Inclusion
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The FCA’s Policy Statement on its new rules on Diversity & Inclusion is expected in 2024, with the rules coming into force the following year. Firms are likely to need to do some preparatory work in preparing for the new rules, in particular considering their D&I strategies, updating data gathering processes and reviewing data retention methods.
Further details are given in our update.
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Policy Statement expected 2024, with rules coming into force in 2025
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The new duty to prevent sexual harassment
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Alongside their changing regulatory obligations, employers will need to take steps to prepare for their new duty under employment law to take reasonable steps to prevent sexual harassment. These obligations come into force in October 2024 and there are several steps firms will need to take to prepare for the new duty, including training, employee communications and reviewing complaints handling processes.
Further details are available in our blog and fuller briefing.
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Coming into force October 2024
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New rules on non-financial misconduct
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The FCA’s recent Consultation Paper sets out its proposals to bring non-financial misconduct expressly within its remit.
In particular, the changes clarify that non-financial misconduct must be taken into account when assessing fitness and propriety, including wrongdoing in a person’s personal or private life. There are also important changes to the Conduct Rules.
The rules represent a shift in focus and raise some challenging issues for firms, who will need to start considering the practical implications of the proposals. For details of the support we can offer, including training, please get in touch with James Green or your usual Burges Salmon contact.
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Policy Statement expected 2024, with rules coming into force in 2025
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Preparing for the new ‘failure to prevent fraud’ criminal offence and other corporate criminal liability reform
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The Economic Crime and Corporate Transparency Act 2023 came into force (in part) on 26 December 2023 and introduces a new ‘failure to prevent fraud’ offence. Certain organisations may commit an offence where employees, agents or other associates commit fraud and the organisation cannot show that it has ‘reasonable prevention procedures’ in place. Further guidance on those procedures is expected from the Ministry of Justice in early 2024. Those are likely to include training, changes to employment contracts for senior staff and updates to policies and procedures.
Further details are available in our briefing.
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Look out for new guidance in early 2024
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Holiday pay reform
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Further reform to the well-trodden topic of holiday pay came into effect on 1 January 2024, with significant changes to the rules governing carry-over and holiday pay calculations for all workers, and a whole new holiday regime for ‘irregular hours’ and ‘part year’ workers for holiday years starting on or after 1 April 2024.
We set out key action points for employers in our update.
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Changes are now in force.
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