Regulatory References Explained: The 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.

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.

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.