Regulatory References Explained: The SMCR Six-Year Rule
Regulatory references are one of the most consequential parts of the SMCR framework and one of the least understood outside compliance teams that deal with them directly. Unlike an ordinary employment reference — which a previous employer can often decline to provide, or limit to dates of employment — a regulatory reference is a mandatory disclosure obligation with real legal teeth on both sides of the request. This guide sets out what firms actually have to do.
What a Regulatory Reference Actually Is
When a firm is considering appointing someone to an SMF, a Certification Regime role, or certain other specified positions, it’s required to request a regulatory reference from every employer the candidate has worked for, in a role covered by the relevant rules, going back six years. The receiving firm — the candidate’s previous employer — is legally required to respond, using a standardised template, and to respond accurately, including disclosing any conduct issues, breaches, or disciplinary matters it’s aware of, even where doing so is uncomfortable or commercially inconvenient for the referencing firm.
The rules are in the FCA Handbook at SYSC 22, which also sets out the mandatory template that must be used.
Who Needs a Regulatory Reference
| Appointment | Regulatory reference needed? |
|---|---|
| Senior Manager (any SMF) | Yes |
| Certification Regime role | Yes |
| Non-executive director who is not an SMF | Yes, at most firms |
| Other staff subject only to the Conduct Rules | No, though ordinary references are still sensible |
| Internal move within the same firm | No new reference, but the firm should review its own records |
Why Six Years, and Why This Matters
The six-year window reflects a judgement that conduct history relevant to fitness and propriety doesn’t necessarily surface immediately, and that a shorter lookback period would let genuinely relevant history fall outside the assessment simply because enough time had passed since the candidate changed roles. For firms hiring into senior regulatory positions, this means the reference-gathering exercise is often more extensive than a standard two-reference employment check — potentially covering several previous employers if the candidate’s career has moved between firms within the six-year window.
What Must Be Disclosed
A responding firm must disclose all matters relevant to the candidate’s fitness and propriety that it’s aware of, including confirmed disciplinary action, upheld conduct rule breaches, and any facts that led the firm to conclude the individual wasn’t fit and proper, even where no formal disciplinary process was completed. This is a genuinely significant obligation: a firm can’t simply provide a neutral “dates of employment only” reference for a role covered by the regulatory reference rules, the way it might for an ordinary commercial reference, because doing so would itself be a breach of the regulatory reference requirement if relevant information was knowingly omitted.
Settlement agreements can’t override this
A settlement agreement between a firm and a departing employee cannot lawfully prevent the firm from providing accurate, complete information in a subsequent regulatory reference. Firms sometimes draft settlement terms — whether from an excess of caution or a genuine misunderstanding of the rules — that appear to restrict what will be said in future references, and any such term is unenforceable to the extent it conflicts with the regulatory reference obligation. This is a point worth firms understanding clearly during a difficult departure, since a settlement that appears to promise a clean reference cannot actually deliver one if the departure involved genuine fitness and propriety concerns.
Retention and Updating Obligations
Firms are required to retain relevant records supporting fitness and propriety conclusions for at least six years, and, in a provision that surprises many firms encountering it for the first time, to proactively update a reference they’ve previously given if new, relevant information comes to light after the reference was provided — even if the individual has already moved on and started their new role. This ongoing obligation means regulatory reference compliance isn’t a point-in-time exercise completed once a hire is made; it’s a standing responsibility that persists for as long as the six-year retention period runs.
Where This Breaks Down in Practice
Requesting references too late
As we note in our guide to Form A submission mistakes, requesting regulatory references only once an offer has already been extended, rather than early in the assessment process, is one of the most common ways firms discover a genuine problem too late to manage it gracefully. Requesting references early — ideally alongside, not after, the substantive candidate assessment — gives a firm time to understand and address any discrepancy before a hiring decision has effectively already been made.
Incomplete employer history
Firms sometimes rely on the candidate’s own account of their employment history to determine which references to request, without independently verifying the full six-year picture through other means — a CV gap or a vaguely described period of “consulting” can obscure a reference-worthy period of regulated employment that never gets requested.
Treating a received reference as the end of the assessment
A clean regulatory reference confirms the absence of a specific category of disclosed issue — it doesn’t independently confirm the candidate’s competence, cultural fit, or suitability for the specific accountability the new role carries. Firms that treat a clean reference as sufficient evidence of fitness and propriety on its own, rather than one input among several, are under-using what the reference actually tells them and over-relying on what it doesn’t.
A Practical Order of Checks
- Confirm the employment history. Get a full six-year history from the candidate, and cross-check it against the FCA Register, Companies House and the CV.
- Request references early. Ask for consent and send requests as soon as a candidate reaches the final shortlist, not after the offer.
- Chase and record. Keep a record of every request, reminder and response. Previous employers must respond, but delays are common.
- Weigh what comes back. Discuss any disclosed matter openly with the candidate and record how the firm assessed it.
- Keep the records. Retain the references and the assessment for at least six years.
Our free regulatory reference checklist and guide to pre-offer checks for SMF candidates set out the full process.
Scenario: A firm recruiting an MLRO receives a regulatory reference from the candidate’s employer three years earlier. It discloses that a conduct rule breach was upheld after she approved a customer without completing enhanced due diligence, resulting in a written warning. The candidate had mentioned it at interview. The firm discusses it with her, notes that it was an isolated matter early in her career, and confirms her later record through her more recent references. It records its assessment and proceeds, and the matter is set out in the Form A.
What This Means for Recruitment Practice
Building regulatory reference requests into the search process early, cross-checking the candidate’s stated employment history independently rather than relying solely on their own account, and treating the reference as one part of a genuinely thorough assessment rather than a final formality — these are the practical disciplines that keep the six-year rule from becoming a late-stage surprise in an otherwise well-run search.
We build regulatory reference requests into every Senior Manager search, from compliance officers and MLROs to chief executives, so they are complete before the offer and the Form A. Our guide to what goes wrong in Form A submissions explains why that matters.
Senior Manager Searches Done Properly
References and checks built in from the start. Every SMF search is overseen by Adrian Lawrence FCA
Compliance and MLRO
Where references matter most.
→ Combined SMF16 and SMF17 → MLRO recruitment (SMF17)SMF16 and SMF17 explained →
Executive Roles
Leadership hires.
→ Regulated CEO (SMF1) → CFO (SMF2)SMF designations guide →
Approval
Getting to a clean Form A.
→ FCA authorisation support → Form A mistakesThe fit and proper test →
Free Templates
Ready-made tools.
→ Regulatory reference checklist → Fit and proper assessment templateBackground checks explained →
Every SMF search is overseen by Adrian Lawrence FCA
Frequently Asked Questions
How far back do regulatory references go?
Six years, covering every employer in that period where the candidate held a role covered by the rules.
Can a previous employer refuse to give a regulatory reference?
No. A regulated firm that receives a request must respond using the mandatory template, and must disclose relevant matters it knows about.
Can a settlement agreement keep something out of a reference?
No. Any term that conflicts with the regulatory reference rules is unenforceable to that extent.
What if new information comes to light after a reference is given?
The firm that gave it must update it if the information would change the reference, within the six-year period.
About the Author
Adrian Lawrence FCA is the founder of SMF Capital. He is a Chartered Accountant and Fellow of the ICAEW, holds a practising certificate in his own name, and is a former listed-company Finance Director with a BSc from Queen Mary College, University of London. He founded FD Capital in 2018 and has since built a network of five specialist recruitment practices. He oversees every SMF Capital search. View Adrian’s ICAEW profile.
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