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9th March 2016
Individual Accountability Regime Begins
Regulatory News: New Accountability Regime Begins! Senior Managers Regime, Certification Regime and Conduct Rules now come into play for Banks...
From the start of this week, Monday 7th March 2016, the new accountability rules come into force for the banking sector, including banks, building societies and certain investment firms that are regulated by both the FCA and PRA.
As discussed previously, there are three main aspects of these new rules:
The new regimes will now ensure that senior managers are held accountable for any misconduct that occurs under their area of responsibility and will also hold individuals working at all levels within relevant firms to appropriate standards of conduct.
The new regimes will now ensure that senior managers are held accountable for any misconduct that occurs under their area of responsibility and will also hold individuals working at all levels within relevant firms to appropriate standards of conduct. As, the soon-to-be Chief Executive of the FCA, Andrew Bailey plainly said, whilst tasks within firms can be delegated, responsibility cannot.
HM treasury advised this now means that “senior managers in UK banks could face 7 years in jail or an unlimited fine if their actions cause their institution to fail.”
Commenting on the new criminal offence, the Chancellor of the Exchequer, George Osborne, said, that the having learnt the lessons from the past, “It is absolutely right that a senior manager whose actions causes their bank to fail should face jail.”
Criminal offences for Senior Managers under the new rules will include:
The introduction of the Senior Managers and Certification Regimes (SM&CR) will also shift the responsibility for ensuring members of staff that are below senior management are ‘fit and proper’ for the roles they undertake, despite not requiring regulatory approval, however there will be more flexibility that will enable regulators to impose higher standards of conduct on a wider range of staff in these firms.
New Accountability Regime Begins
Read our latest articles, news and views affecting compliance and regulation in the UK Financial Services Industry.
“At the heart of the new accountability regime is one very simple principle - you can delegate tasks but you cannot delegate responsibility. Senior managers at banks and insurers should know what they are responsible for and can be held accountable for failings in their area.”
Deputy Governor, Prudential Regulation, Bank of England and CEO of the PRA (March 2016)
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