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Home > Prudential Regulation Authority > Strengthening accountability
 

Strengthening accountability

This page contains latest news, the background and key changes to the accountability regimes (including remuneration) for PRA regulated firms, together with links to materials and information on forms and policy development, and what's coming up.

Latest news

July 2017

On Thursday 20 July, the PRA published Policy Statement 19/17 ‘Responses to CP2/17 ‘Occasional Consultation Paper’’ which includes policy on regulatory references.

As set out in PS12/17 'Strengthening individual accountability in banking and insurance: amendments and optimisations', on Monday 3 July the application of the Conduct Rules to Notified non-executive directors (NEDs) became effective and will apply to breaches identified on or after that date.

From Monday 3 July firms will also be required to notify the PRA of any internal disciplinary action due to breaches of the Conduct Rules against Notified NEDs. In CP8/17 'Strengthening accountability in banking and insurance: optimisations to the SIMR, and changes to SMR forms' the PRA consulted on changes to the relevant form to submit these notifications (Form L). If a firm need to make a relevant notification before the revised forms are finalised and published, the firm should send notifications through alternative means to their usual supervisory contact.

June 2017

On Tuesday 13 June, the PRA published CP8/17 'Strengthening accountability in banking and insurance: optimisations to the SIMR, and changes to SMR forms'. The consultation on the proposals in:

  • Chapters 2 and 3 closes on Friday 22 September 2017; and
  • Chapter 4 closes on Monday 14 August 2017.

May 2017

On Friday 12 May 2017, the PRA issued policy on the accountability regimes:

  1. Strengthening individual accountability in banking and insurance: amendments and optimisations – PS12/17
  2. Strengthening individual accountability in banking – SS28/15 UPDATE
  3. Strengthening individual accountability in insurance – SS35/15 UPDATE
  4. Conditions, time limits and variations of approval – Statement of Policy UPDATE

See Strengthening accountability - Policy development for all strengthening accountability publications. 

March 2017

Tuesday 7 March 2017 marks one year since the implementation of the Senior Managers & Certification Regime (SM&CR). Following the reminder on Tuesday 7 February 2017, requirements related to two aspects of the strengthening accountability regimes have taken effect today:

People in or working with dual-regulated firms may also find it useful to see the FCA's website, where an update has been posted today.

The Bank of England and Financial Services Act 2016 requires the full SM&CR to be extended to insurers. During Q2 2017 the PRA and FCA will consult on the extension, with implementation expected in 2018.

February 2017

On Thursday 16 February, the PRA published Consultation Paper 2/17 ‘Occasional Consultation Paper’, which includes proposals on amendments to regulatory references rules.

On Tuesday 7 March 2017, requirements related to two aspects of the strengthening accountability regimes take effect:

October 2016

On Thursday 20 October 2016 the Deputy Governor for Markets and Banking Minouche Shafik and Executive Director for UK Deposit Takers Supervision James Proudman spoke at the New York Federal Reserve’s ‘Reforming Culture and Behaviour in the Financial Services Industry: Expanding the Dialogue’ conference. See the news release, which includes links to speeches.

September 2016

On Wednesday 28 September 2016 the PRA issued four publications on the strengthening accountability regimes:

See Strengthening accountability - Policy development (Related Links) for all strengthening accountability publications.

On Wednesday 28 September the PRA also issued publications, aligned with the FCA, on remuneration rules and whistleblowing; a list of all publications is available here. For information on the FCA publications please see the FCA's website.

The deadline for insurers to submit their Scope of Responsibilities (SoRs) is Wednesday 7 September 2016 as set out in Key Function Holder - Notifications 6.3 in the PRA Rulebook. Insurance firms that have not submitted their SoR form by this date are reminded that SoR forms for Solvency II and non-Solvency II firms can be found on the Senior Insurance Managers Regime - submitting, amending, withdrawing page of the website.

Solvency II firms and large non-Solvency II firms should send their SoRs to: PRA-ApprovedPersons@bankofengland.co.uk by Wednesday 7 September 2016 unless they have a named supervisor, in which case, please send directly to them. Small non-Solvency II firms are not required to submit SoRs to the PRA.

August 2016

On Wednesday 31 August 2016 the PRA reminded insurance firms of the Wednesday 7 September 2016 deadline for submitting their Scope of Responsibilities (SoRs) as set out in Key Function Holder - Notifications 6.3 in the PRA Rulebook. SoR forms for Solvency II and non-Solvency II firms can be found on the Senior Insurance Managers Regime - submitting, amending, withdrawing page of the website. For details on completing SoRs, firms are referred to the update issued on 7 July 2016.

Solvency II firms and large non-Solvency II firms should send their SoRs to: PRA-ApprovedPersons@bankofengland.co.uk by Wednesday 7 September 2016 unless they have a named supervisor, in which case, please send directly to them. Small non-Solvency II firms are not required to submit SoRs to the PRA.

For dual-regulated firms, the FCA notification of Conduct Rule breaches, or 'Form H', reporting window opens on Thursday 1 September 2016 and will close on 31 October 2016. Firms should use the form to report any breaches where disciplinary action has been taken or commenced from 7 March 2016 to 31 August 2016. For more information, please see the FCA website.

On 12 August 2016, the PRA issued a letter to the chairs of banks' boards reminding them of the important role that diversity plays in promoting good governance, and the obligations on firms in this area.

PRA rules on diversity within firms' management body

Tuesday 9 August update: The deadline for Solvency II firms and large non-Directive firms (NDFs) to submit their Scopes of Responsibilities (SoRs) is Wednesday 7 September 2016. The key requirements for insurers submitting their SoRs are highlighted below:

  • All Senior Insurance Management Functions (SIMFs) that grandfathered into the new regime on 7 March 2016 are required to provide to the PRA a completed SoR form by Wednesday 7 September 2016.
  • All current key function holders (KFHs) who are also in a Financial Conduct Authority (FCA) Controlled Function (CF), are expected to provide to the PRA a completed SoR by Wednesday 7 September 2016 if they haven't already done so.
  • All current KFHs, other than: i) 'notified non-executive directors (NEDs)' as defined in the PRA Rulebook; ii) PRA SIMFs; or iii) FCA CFs, are required to have provided a completed Form M to the PRA by Wednesday 7 September 2016.
  • Any notified NEDs who were appointed after 7 March 2016 should submit a Form M to the PRA as soon as reasonably practicable after the appointment of the NED.
  • No further information is required from notified NEDs who were already in post on 7 March 2016.
  • No information is required from small NDFs at this time.

Please refer to the update below issued on 7 July 2016, which provides links to information and details on how firms should submit SoRs and other forms.

July 2016

On Friday 8 July 2016, to reflect changes in PRA senior management, the PRA updated its internal application of the Senior Managers Regime, which contains its Management Responsibilities Map and the Statements of Responsibilities for executive Senior Managers.

Prudential Regulation Authority - Senior Managers Regime (response to the Treasury Select Committee recommendation) - UPDATE

On Thursday 7 July 2016 the PRA reminded insurance firms of the Wednesday 7 September 2016 deadline for submitting their Scope of Responsibilities (SoRs) as set out in Key Function Holder - Notifications 6.3 in the PRA Rulebook. SoR forms for Solvency II and non-Solvency II firms can be found on the Senior Insurance Managers Regime - submitting, amending, withdrawing page of the website. For details on completing SoRs, firms are referred to:

The SoRs will be looked at as part of a firm's supervisory cycle.

Solvency II firms and large non-Solvency II firms should send their SoRs to: PRA-ApprovedPersons@bankofengland.co.uk by Wednesday 7 September 2016 unless they have a named supervisor, in which case, please send directly to them. Small non-Solvency II firms are not required to submit SoRs to the PRA.

May 2016

On 9 May Andrew Bailey gave a speech entitled 'Culture in financial services - a regulator's perspective' at the City Week 2016 Conference. In the speech he cited the introduction of the Senior Managers and Certification Regime as an important step in tackling problems with culture in financial services.

Culture in financial services - a regulator's perspective - speech by Andrew Bailey

On 4 May, the Bank of England and Financial Services Bill received Royal Assent, making it an Act of Parliament - the Bank of England and Financial Services Act 2016 (the Act) (see External Links). This includes statutory changes to the Senior Managers and Certification Regimes. The PRA and FCA may be required, or find it appropriate, to consult in due course on modifications to the rules and expectations already consulted on and published. The PRA will provide updates on this webpage and other channels, including firms’ usual supervisory contacts.
 

March 2016

On 31 March, the PRA published PS13/16 'Corporate governance: Board responsibilities' and SS5/16 'Corporate governance: Board responsibilities'. See also the Strengthening accountability - Policy development webpage (Related Links).

Update on 7 March 2016 - The Senior Managers Regime and Senior Insurance Managers Regime have now been implemented. See below for summaries on updates to banking and insurance following implementation.

  • Banking - the Senior Managers Regime is aimed at supporting a change in culture at all levels in firms through a clear identification and allocation of responsibilities to individuals responsible for running them. This is an important element of the PRA’s approach to the assessment of management and governance at firms, and part of the integrated and structured way that the PRA delivers its forward-looking judgement-based approach to banking supervision. The PRA will therefore consider the information provided by firms in their submission as part of the usual supervisory cycle and in any cross-firm analysis.
 
  • Insurance - the letter from Sam Woods, Executive Director of Insurance Supervision, on 25 August 2015 set out the path to implementing the Senior Insurance Managers regime fully. The letter outlines the key dates beyond 7 March 2016 for insurance firms. On 7 September 2016, Solvency II firms and groups must have a Scope of Responsibilities in place for all Senior Insurance Management Functions. Also on 7 September 2016, all Solvency II firms and groups must also have notified the PRA of all Key Function Holders. Firms may find the SIMR Q&A of 21 December 2015 helpful.
  • Approvals under the SMR and SIMR. For information on approvals, and how to submit, amend and withdraw approvals under the new regimes, please visit the Senior Managers and Senior Insurance Managers regimes - Approvals (below and Related Links).

Senior Managers and Senior Insurance Managers regimes - Approvals

  • Further updates on Strengthening accountability: These pages will continue to host further updates and information on the accountability regimes. See the Policy Development page for information on policy. All updates before 7 March 2016 are available in the document below.
On 7 March 2016 the PRA also published its own internal application of the Senior Managers Regime. This follows the Treasury Select Committee's recommendation that the PRA complete a Responsibilities Map in line with the core principles of the SMR for banks. The PRA response to this recommendation is published below.
 
 

Background

As part of implementing the recommendations in the final report of the Parliamentary Commission on Banking Standards (PCBS), in 2014 the PRA and Financial Conduct Authority (FCA) started developing new Senior Manager and Certification Regimes that will help to support a change in culture at all levels in ‘relevant authorised persons’[1]. The PRA is also replacing its Approved Persons Regime for insurers.

The key changes

From 7 March 2016, the Senior Insurance managers Regime and Senior Insurance Managers Regime introduced: 

  • A new ‘Senior Managers Regime’ (SMR) and ‘Senior Insurance Managers Regime’ (SIMR) for individuals who are subject to regulatory approval, which will require firms to allocate a range of responsibilities to these individuals and to regularly assess their fitness and propriety.
  • A ‘Certification Regime’ (CR) for banking firms which will require relevant firms to assess the fitness and propriety of certain employees who could pose a risk of significant harm to the firm or any of its customers.
  • A new set of ‘Conduct Rules’ applying to banking and Solvency II firms that includes the responsibility of senior managers for oversight of any delegated activities.

Implementation

The implementation timetable was announced by HM Treasury on 3 March 2015. See the full announcements, a link to HM Treasury’s Transitional Provisions Order, and a link to the FCA’s website in External Links.

Links to forms for approvals under the new regimes, and a table with links to all PRA policy publications are available in Related Links.

[1] ‘Relevant authorised persons’ is defined in section 71A of the Financial Services and Markets Act 2000 and covers banks, building societies, credit unions and PRA-designated investment firms.  

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