New strict bankers regulatory regime extended across financial services


The Treasury has scrapped plans that would have treated senior financial services executives as ‘guilty until proven innocent’ in regulatory probes.

New rules that had been aimed at making individual senior bankers responsible for regulatory infringements will be extended across the entire financial sector, as part of a new regulatory regime due to come into effect next March.

But a proposed ‘presumption of guilt’ clause will not be included.

“We are extending the Senior Managers & Certification regime so that tough standards of personal responsibility and accountability apply beyond banking and across the entire financial services industry,” a Treasury spokesman said.

The new rules have dropped a requirement for top bankers to prove they were unaware or had taken action to prevent misconduct at their institutions, but introduce a less onerous ‘duty of responsibility’ requiring senior managers to take steps to prevent a regulatory breach from occurring.

In June, the Fair and Effective Markets Review conducted by the Treasury, regulators and the Bank of England recommended extending the regime to non-banking parts of the financial services industry.

“Extending the senior managers’ and certification regime is an important step in embedding a culture of personal responsibility throughout the financial services industry,” said Tracey McDermott, acting chief executive of the FCA.

“While the presumption of responsibility could have been helpful, it was never a panacea.

“There has been significant industry focus on this one, small element of the reforms, which risked distracting senior management within firms from implementing both the letter and spirit of the regime.”

She added that, at the FCA, “We remain committed to holding individuals to account where they fail to meet our standards.”