For the most part, the senior managers' regime has been in place since 7 March. However, in the count-down to implementation the FCA opted to defer important decision making in relation to the treatment of individuals based overseas who (if they were based in the UK) would be certified persons. The FCA plan to revisit the matter and its treatment has significant ramifications for non-EEA overseas banks with UK branches.
As a reminder, in June 2014 in his Mansion House speech, George Osborne signalled his intention that the new senior managers' regime apply to UK branches of foreign banks. In its July 2014 Consultation, the FCA proposed that the certification regime would apply to such overseas banks on the basis either that employees performed their significant harm function from an establishment in the UK or were overseas but dealing with a UK client. The FCA said that this was because individuals operating overseas would be unlikely to impact on the FCA's objectives if they were not dealing with UK clients. In its March 2015 consultations, the FCA broadened the scope of its approach further and proposed that all line managers of certified persons should also be certified even if based overseas, provided their supervisees were dealing with UK clients. It was said that this was in order to prevent certified staff facing pressure to act inappropriately by those otherwise outside of the certification regime. In its August 2015 feedback statement, the FCA then compounded the wide extra-territorial impact of the certification regime by publishing proposed guidance on the phrase "dealing with a client in the UK" that was extremely broad. Dealing with included any contact. A client in the UK meant being in the UK at the time of the contact.
Despite respondents' concerns about the very wide scope of the regime's application to individuals overseas and the breadth of the guidance on "dealing with a client in the UK", it was not until its December 2015 policy statement that the FCA revisited its stance and even then only temporarily. The FCA proposed at that stage that only individuals performing significant harm functions based in UK branches would be subject to certification. However, the FCA also said that it planned to revisit territoriality after March 2016.
The FCA has yet to publish its promised consultation on the extra-territorial application of the certification regime. However, based on the policy concerns it expressed in 2014 and 2015, in order to satisfy its statutory objectives, it will soon have to do so. Any proposals that are put forward need not only to satisfy the FCA's concerns about overseas individuals having an impact on its objectives in the UK, but they also need to be manageable and workable from the UK branch's perspective (something that seems to have been neglected up to now). It will no doubt be left in most cases to the branch alone to monitor and certify appropriately and it is well known that UK branches of overseas banks often struggle to maintain meaningful autonomy from their overseas headquarters. An approach to certification that requires an assessment by the branch at the outset of who overseas may possibly in future have contact with a client based in the UK at the time of the contact, does not seem to be practically workable.