As the FCA and PRA publish their final rules on the new banking accountability framework this week, the CEO of the FCA, Martin Wheatley, delivered a speech focusing on the practicalities and challenges surrounding the changes.  The new regime seeks to encourage greater individual accountability in banking, starting with senior management, and flowing down to staff at all levels.

The focus of industry needs to shift now from policy debate and onto practical implementation”, said Mr Wheatley.  The changes announced by the FCA go hand in hand with clarity of reporting lines and responsibilities, recruitment of the appropriate staff for the role, performance management, training, and considering consumer and market outcomes.  Mr Wheatley added, “but this doesn’t necessarily mean major process overhauls.  There is a real danger of over-engineering the solution.” 

The practical steps firms will need to implement before the commencement of the new regime in March 2016 were announced in the FCA’s policy statement.  Firms will need to identify the individuals that hold senior management functions and allocate a series of responsibilities appropriately, thinking about any gaps.  Finally firms will be required to record the resulting allocation of roles.

The FCA’s focus has been to make the rules proportional, simple and less burdensome on smaller firms and lessen reporting requirements to save costs. For example, following feedback from firms, the FCA removed from scope non-executives who do not have specific roles on a board.  “The overall aim is clear – we want to see standards of individual conduct rise across firms at all levels. The regime is designed to be inherently proportionate, and to fit with the realities of running complex financial services firms”, said Mr Wheatley.