On 15 October 2015, HM Treasury announced significant changes to the Senior Managers’ Regime (SMR), which is due to come into force in March 2016.

Previously, one of the more notable (and controversial) features of the SMR was the introduction of a “presumption of responsibility” which, in the event of a regulatory breach, would have shifted the burden of proof from regulators to the managers themselves, requiring them to prove that they had taken reasonable steps to prevent the breach.

However, the “presumption of responsibility” has been removed from the SMR, with the Treasury announcing that senior managers will instead be subject to a “statutory duty of responsibility”. The Treasury has explained that, although managers would still be under “the same tough underlying obligation” to take reasonable steps to prevent regulatory breaches, “the burden will be on the regulator to prove that a senior manager has failed to do this”.

In addition, although  the  SMR’s  impact  has  arguably  been  reduced, its scope (and that of the Certification Regime) has been widened considerably, with the Treasury announcing that it will be extended across the “whole financial services industry” and not, as previously intended, banks and insurers only.