BBA and the Association for Financial Markets in Europe (AFME) have written to FCA reiterating their view that the Head of Legal function within a bank should not be classified as a senior management function (SMF), and is more appropriately classified (as it currently is in most banks) as a certified function. The main arguments the associations make against the SMF status are:
- the General Counsel teams within banks have increasingly become an important, independent part of firms’ risk management processes. Any move that threatened the independence of the function would be a poor one, and would be likely to force legal advice requirements out to external counsel to maintain privilege, which could be detrimental to the overall risk management culture of the institution;
- lawyers are already regulated by their professional bodies and required to observe high standards of conduct; and
- the obligations of lawyers to maintain independence would be threatened by making the role an SMF in addition to deterring staff from seeking advice in confidence and potentially eroding privilege.