Strengthening accountability in banking: a new regulatory framework for individuals

Consultation Paper 14/14
Published on 30 July 2014

Background

This joint PRA and Financial Conduct Authority (FCA) consultation paper (CP) sets out proposed changes to the way individuals working for UK banks, building societies, credit unions and PRA-designated investment firms are assessed and held accountable for the roles they perform. 

The proposals reflect the recommendations of the Parliamentary Commission on Banking Standards and implement changes required under the Financial Services and Markets Act 2000 (FSMA) as amended by the Financial Services (Banking Reform) Act 2013.

Summary of the proposals covered by the CP

The changes are significant and include:

  • a new Senior Managers Regime for individuals who will be subject to regulatory approval; and
  • a Certification Regime which will require relevant firms to assess the fitness and property of certain employees who could pose a risk of significant harm to the firm or any of its customers.

The proposals in this consultation are intended to create a new framework to encourage individuals to take greater responsibility for their actions, and will make it easier for both firms and regulators to hold individuals to account.

Annexes to CP14/14 include the regulators’ cost benefit analyses, compatibility statements, draft Handbook text and rules, a draft statement of policy and draft supervisory statements.

The same CP is available on the FCA’s website with the reference ***CP14/13.

The regulators are seeking views on the implementation timetable for the introduction of the new regimes and expect to publish this with their final policy statements and any supporting guidance or supervisory statements around end 2014/early 2015.

Readers may also wish to refer to Strengthening the alignment of risk and reward: new remuneration rules – CP15/14 and Clawback – PS7/14 published simultaneously with CP14/14.

Responses

The consultation closed on Friday 31 October 2014.

PDFConsultation Paper 14/14

Annex 10 - Cost Benefit Analysis of the New Regime for Individual Accountability and Remuneration - Final Report
Europe Economics - 28 July 2014 (commissioned by the Financial Conduct Authority)

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PDFPress release

 

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