On 28 May 2015 the FCA published a speech given by Martin Wheatley, Chief Executive of the FCA, on restoring trust and confidence in banking.
Mr Wheatley focused on the need to address cultural issues in the banking sector, by implementing methods that “reduce incentives for misconduct and increase personal accountability”. Though there has been significant attention focused on senior leaders, he commented that middle managers play a “critical, but underplayed” role in restoring trust and confidence in banking. They influence a greater number of colleagues on a day-to-day basis than senior leaders, nevertheless there is a “blind-spot” as they are not subject to the same regulatory “fit and proper” standards as those above or beneath them. “For leaders, this is a problem because accountability structures begin to resemble safety nets with significant holes,” said Wheatley. “You might have junior advisory staff in banks approved. Senior commodities traders not.”
To address this, the FCA is in the process of replacing the approved persons regime with a new “certification regime”. This places a much clearer expectation on firms to uphold standards of fitness and propriety of anyone in a so-called ‘significant harm function’. Additionally, the FCA’s new set of conduct rules will be applicable to all individuals involved in financial services activity in banks.