The FCA and the PRA have published the final rules (the Rules) aimed at improving individual accountability within the banking sector. The Rules cover the Senior Managers Regime, the Certification Regime and the Conduct Rules.
The Rules cover various topics such as remuneration in banks, building societies, and PRA designated investment firms. Martin Wheatley, Chief Executive of the FCA, commented “Today we have given clarity on rules that will embed personal accountability into the culture of the city. The new conduct rules will add further momentum to improving the standard across the industry.”
The Rules have evolved from the Parliamentary Commission for Banking Standards’ report of June 2013, which set out recommendations for improving legislation and the professional culture and standards in banks and the subsequent Banking Reform Act of 2013.
Key points in the Rules include:
- Senior Managers Regime: aims to allocate responsibility to individuals who carry out Senior Management Functions. Those who fall under the regime will continue to be pre-approved by regulators and firms must also ensure the procedures in place allow them to assess the fitness and propriety of staff.
- Certification Regime: applies to those who pose a significant risk of harm to the firm or any of its customers. These individuals will not be pre-approved by regulators, but firms must have a procedure which allows them to assess an individual’s own fitness.
- Conduct Regime: sets out the basic standards of behaviour which are expected. Firms should ensure that staff are aware of the rules and how they will apply them.
The Rules can be read in full here.