On November 17, 2014, HM Treasury published its proposals for extending the new UK senior managers' regime to UK branches of foreign banks and Prudential Regulation Authority (“PRA”) designated investment firms (i.e. those branches that deal in investments as principal in the UK that are regulated by the PRA). The proposals do not extend the potential liability of a senior manager in a UK branch of a foreign firm to the new offence relating to a decision causing a firm to fail. However, the reverse burden of proof on a senior manager when a firm fails to comply with its regulatory requirements would apply. If the proposals proceed, the FCA and PRA will be responsible for making the final rules. The UK regulators have some flexibility in making rules in terms of their approach to different types of firms. This means that approaches may be different for UK branches of firms established in the European Economic Area ("EEA") than for that adopted for UK branches of firms established outside of the EEA. Both regulators are expected to consult on proposed rules for UK branches of foreign firms before the end of 2014. The PRA and FCA consulted on their approach to UK firms earlier this year but were waiting for the proposals from HM Treasury on extending the senior managers regime to UK branches of foreign firms before consulting on their rules in that regard. Final rules are expected in Q1 2015 for both UK firms and UK branches of foreign firms. Responses to the HM Treasury consultation are due by January 30, 2015.
The consultation paper is available at: