The UK Financial Services and Markets regulators have responded to the recommendations addressed to them in the final report of the Parliamentary Committee on Banking Standards (PCBS). The responses cover the following key areas:
- Individual responsibility: responsibility over key risks will have to be assigned to individual Senior Persons within a firm. FCA says that the use of "individual attestations" will be key in its approach to Senior Persons. It also clarifies that this new Senior Persons Regime will only affect individuals within deposit-taking institutions, but a "Licensing Regime" based on standards would apply to a wider number of employees. FCA will consult on the content of those standards and the population of employees to whom they will apply.
- Governance: they agree with the Government that the PCBS proposals on remuneration practices can be achieved by reviewing the Remuneration Code. They will do this in 2014, in line with CRD4 provisions on staff having a material impact on a firm's risk profile. PRA also noted that it already has enough powers to effect the recovery of vested remuneration.
- Competition: FCA points at its recently announced competition programme, while PRA agrees with the need to have competition as secondary objective, provided it does not distract it from its primary objective of safety and soundness. They both highlight the revised approach to reducing barriers to entry for new bank applications.
- Reinforcing responsibilities of regulators: they do not believe the new "special measures" tool is needed, as they already have a range of powers such as requiring skilled persons reports or imposing requirements under section 55M FSMA.