A new regime intended to make top bosses at banks more accountable for their actions will be extended to other parts of the financial services industry in 2018, according to a proposed law set out by the government.
The senior managers and certification regime – which puts the onus on top bosses to take responsibility for their actions – is being introduced for banks, building societies, credit unions and some investment firms from March 2016. It was one of the ideas from the parliamentary commission on banking standards, chaired by Conservative MP Andrew Tyrie and set up in the wake of Barclays’ £290m fine in 2012 for rigging Libor.
Some insurance bosses will be subjected to accountability rules from 2016, but will fall under the full scope of the senior managers regime from 2018.
The Bank of England and financial services bill introduced in the Lords stipulates that fund managers, mortgage brokers and consumer credit firms will be covered by the regime from 2018. This means it is being extended from 1,500 firms to 60,000 by 2018 – which is later than some in the industry may have feared.
Senior managers are to be subject to a “duty of responsibility” clause. This requires them to take appropriate steps to prevent a regulatory breach from occurring.
Seeing through the implementation of the regime was one of the areas that Martin Wheatley listed among his “unfinished business” when he was pushed out of the Financial Conduct Authority (FCA). His contract was not renewed by chancellor George Osborne and the position he vacated in September is yet to be filled on a permanent basis.
The FCA had consulted on the regime being extended to a wide range of traders who had not originally expected to be covered by the rules.
The Bank’s governor, Mark Carney, has also stressed the importance of the regime, using June’s Mansion House speech to call for its extension to all firms active in fixed income, commodity and currency markets – the subject of much of the controversy over price rigging – including dealers and asset managers.
A Treasury spokesperson said the regime would now cover all financial services firms in the UK: “A key part of the government’s long-term plan is to restore trust in Britain’s financial services sector so that it works better for customers and businesses.
“Ensuring that these firms are properly run is vital for the health of our economy. That’s why we are extending the senior managers and certification regime so that tough standards of personal responsibility and accountability apply beyond banking and across the entire financial services industry. This will ensure that all financial services firms in Britain operate to the highest standards.”
The bill also contains measures to strengthen the accountability of the Bank
This article was written by Jill Treanor, for theguardian.com on Thursday 15th October 2015 00.01 Europe/Londonguardian.co.uk © Guardian News and Media Limited 2010