UK Regulator To Point Finger At Senior Staff In Event Of Slip-Up

Josh O'Neill

27 July 2017

The UK's financial watchdog has outlined its proposals to extend a regime that holds managerial staff accountable for their conduct to nearly all sectors of financial services, piling more pressure on senior staff to take responsibility for mishaps.

The yesterday published proposals to extend the Senior Managers and Certification Regime (SM&CR) to “almost all” regulated firms, essentially replacing the Approved Persons Regime.

“The aim of the new regime is to reduce harm to consumers and strengthen market integrity by making individuals more accountable for their conduct and competence,” the FCA said.

The regime will require staff at all levels to take personal responsibility for their actions, while firms and their staff will “clearly understand” and be able to demonstrate where responsibility lies, the FCA added.

The regulator's move comes amid industry patter about who is to personally blame when slip-ups occur. In some cases, it is obvious. For example, investigators can usually single out insider traders with ease because of their personal communications. In others, however, it can be clouded, especially when large divisions of a company find themselves in the firing line.

The FCA says the “responsibilities of senior managers will be clearly set out and, should something in their area of responsibility go wrong, they can be personally held to account”.

Under the regime, firms will certify individuals for their “fitness, skill and propriety” at least once a year, if they are not covered by it but their jobs “significantly” impact customers or firms, the FCA said.

“The extension of the Senior Managers and Certification Regime is key to driving forward culture change in firms,” Jonathan Davidson, executive director of supervision – retail and authorisations at the FCA, said. “This is about individuals, not just institutions. The new conduct rules will ensure that individuals in financial services are held to high standards, and that consumers know what is required of the individuals they deal with. The regime will also ensure that senior managers are accountable both for their own actions, and for the actions of staff in the business areas that they lead.”