The Financial Conduct Authority (FCA) and the Prudential Regulation Authority (PRA) in the UK have announced that in future, non-executive directors with specific responsibilities will come under the new senior managers' regime. Those affected will be relevant non-executive directors in UK banks, building societies, credit unions, PRA-designated investment firms and Solvency II firms.
Following a detailed consultation across industry and with stakeholders, it was also decided that the new regime would not apply to those non-executive directors who do not perform delegated responsibilities. The roles that will be within the scope of the regime are chairman, senior independent director and the chairs of the risk, audit, remuneration and nominations committees.
The individuals performing these roles will be subject to all aspects of the senior managers' regime, including regulatory pre-approval, the FCA’s and PRA’s new conduct rules, and the presumption of responsibility.
Those non-executive directors who fall outside the regime will no longer be subject to regulatory pre-approval, and will not be subject to the conduct rules or the presumption of responsibility. Within the regime, senior executives will be expected to take accountability for the conduct of the business for which they are responsible.
The revised approach to non-executive directors is set out in a joint FCA and PRA paper entitled Approach to non-executive directors in banking and Solvency II firms & Application of the presumption of responsibility to Senior Managers in banking firms.