The FSA appears to have blocked John Hyman; should you be scared?

The Times reports this morning that John Hyman, the former global co-head of capital markets at Morgan Stanley, appears to have been blocked from joining Nomura, where he was to have been co-head of global finance.

Hyman's left Morgan Stanley unexpectedly in December shortly before bonuses were paid. Now, his ascension to a senior role at Nomura appears to have been blocked by the FSA, although the regulator isn't commenting on whether this is really true.

It's all a little unnerving given that the FSA isn't being disbanded (for the moment), and is becoming more prone to throwing its weight around.

Since February, the regulator has broadened the number of people working in so-called "significant influence functions" in banks, whose activities it takes an interest in. As well as senior executives and non-execs, these now include senior people on risk, audit, or remuneration committees, heads of the finance, risk and internal audit functions, and around 2,000 proprietary traders who are deemed to exert significant influence on the firm.

Anyone moving into one of these roles now has to satisfy the FSA that they're fit and proper to do so. As described in an FSA paper on corporate governance last year, the FSA's newly beefed up vetting process involves:

· Filling in a very detailed application form (including the notorious Section V Approved persons form)

And...

· Attending a 90 minute interview conducted by 'a panel made up of FSA supervisors, technical specialists and other senior specialist support such as our panel of senior advisors.'

During the interview, the FSA warns that people will be asked questions covering, 'a range of issues,' including, 'market knowledge, risk management and control, and governance and oversight.' They will also be expected to show evidence of, 'the right behaviours - such as openness and cooperativeness with us,' and to manifest, 'key soft skills relevant to a role, such as the skills needed to lead and direct a key committee.'

If all of this sounds a little daunting, it evidently is. Last September, The Times reported that 10% of people who'd applied for, "significant influence functions," had pulled out once they encountered the FSA's newly intrusive methods of scrutiny.

Now Hyman appears to have been dinged and things are looking scarier than ever.

How to avoid falling foul of the FSA's screening process

If you're moving jobs and are faced with an FSA screening, regulatory lawyers offer the following helpful advice:

· Be totally truthful when you're filling in Section V

"They will ask if you've been subject to any investigations relating to misconduct," says Harvey Knight, a regulatory consultant at Withers and the former lead FSA lawyer to the FSA's authorisation and approvals function. "The FSA can become much more concerned with non-disclosure of such investigations than the fact that an investigation has taken place," Knight adds. "You are given the opportunity to provide supplementary information about the circumstances which resulted in that investigation and you should take that opportunity".

· Prepare to be quizzed heavily about the organisation you intend to join

"Expect to be asked about the strategic direction of the firm, its business plan, its risk management, systems and controls, and your impressions of the quality and culture of the existing senior management," says Knight. "They are basically asking what kind of due diligence you've done on your new employer."

· Remember, that the FSA is trying to establish whether you're competent, honest, and financially sound

If you fail on any one of those points, you'll probably suffer a fate similar to that which appears to have been John Hyman's.