In its Quarterly Consultation CP24/11 the FCA is consulting on proposals to introduce compulsory DBS checks for all owners and controllers of financial institutions (or an equivalent for persons outside of England and Wales) following the recommendation from the Financial Action Task Force (FATF).
To date, criminal background checks are conducted only when specific concerns come to light about an individual’s fitness and propriety. This new proposal aims to further enhance the regulator's assessments of controllers in the future, with a view to creating both greater market integrity and consumer protection. As such, all controllers and beneficial owners will need to obtain criminal background checks from the Disclosure and Barring Service (DBS). It will apply to those making an application for authorisation or registration with the FCA or for a notice of an intended acquisition or increase in control (‘change in control’ or ‘CIC’).
A basic DBS check costs £18 per application and takes approximately 14 days to process. It details any spent and unspent convictions, cautions, reprimands, and warnings that are held on the Police National Computer (PNC). Controllers who are based outside England and Wales will be expected to apply for a basic DBS equivalent.
The regulator plans to implement this new proposal by asking applicants or notice givers to confirm to the FCA that a basic DBS check for controllers has been undertaken within the last 6 months when submitting the relevant application or CIC notification. In some circumstances it may also request a copy of the DBS certificate when deemed necessary. It is recognised however that in rare cases this requirement may be unreasonable where, for example, a DBS equivalent cannot be obtained due to jurisdictional limitations.
Based on recent data it is expected that 4 in 10 individuals will require a DBS check who have never been subject to one previously. Between 3,000 and 12,100 additional DBS checks a year will be required, costing all firms a total of between £53,000 and £217,000 a year (between £13 and £55, on average per firm per year). As part of the consultation the regulator believes these costs are both minimal for firms, as well as proportionate to the aim of deterring controllers from withholding adverse information.
Subject to feedback on this consultation, DBS checks will be required for all new applications or notifications submitted from January 2025. Applications and notifications submitted prior to this date however will not be affected, including those which have not yet been determined when the new requirements are introduced.
The FCA invites any comments regarding the proposal to be submitted by12th August.
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