This policy statement provides feedback on those aspects of CP14/14 Strengthening accountability in banking: a new regulatory framework for individuals which were not dealt with in PS3/15 Strengthening individual accountability in banking and insurance – responses to CP14/14 and CP26/14. It also provides feedback on responses to the proposals in CP28/14 Strengthening accountability in banking: forms, consequentials and transitional aspects and the proposals relating to banking (but not insurance) firms in CP7/15 Approach to non-executive directors in banking and Solvency II firms & Application of the presumption of responsibility to Senior Managers in banking firms.
Appendix 1 to this policy statement contains a set of final PRA rules (further to those published in PS3/15) to implement the Senior Managers Regime (SMR) and Certification Regime for UK banks, building societies, credit unions and PRA-designated investment firms. These firms are collectively referred to in the Financial Services and Markets Act 2000 (FSMA) and in this policy statement as ‘Relevant Authorised Persons’.
Also published alongside this policy statement are:
Supervisory Statement 28/15, which sets out the PRA’s expectations of firms in relation to the new regimes (see Related Link); this combines the draft supervisory statements consulted on in CP14/14 and CP7/15 and, where appropriate, updates them to take account of feedback to the consultations and/or the PRA’s final rules and policy (as set out in PS3/15 and this policy statement); and
a final statement of policy on the PRA’s use of the power to impose conditions and time limits on an approval to perform a Senior Management Function (SMF) – a draft of which was consulted on in CP14/14.
Further aspects of the Senior Managers and Certification regimes
This policy statement does not contain further substantive rules on the regulatory references to be issued by a current or former employer when a new firm is considering appointing a person to a Senior Manager or certified role (other than to extend the basic requirement to require a reference from former employers issued in PS3/15 to also cover former NED roles). On 10 June 2015 the Fair and Effective Markets Review (FEMR) issued recommendations about the form and content of such references, and the PRA wishes to consider these recommendations further before finalising its approach to regulatory references. It is expected that the PRA’s original proposals, as consulted on in CP14/14, will need to be amended in order to implement the FEMR recommendations in this area, and the PRA therefore expects to issue a further consultation on additional proposals for regulatory references later in the summer. The PRA intends that its final rules on references will be made before the commencement of the SMR and Certification Regime in March 2016.
The PRA plans to issue a further policy statement that will provide feedback on responses to CP9/15 Strengthening accountability in banking: UK branches of foreign banks and include final and near-final rules on the application of the new regimes to UK branches of non-EEA firms (incoming branches) later in 2015. That policy statement will include an updated version of SS28/15 setting out the PRA’s expectations of how incoming branches should comply with the new regimes. The PRA cannot make all of the relevant final rules applying the regime in full to incoming branches until the necessary secondary legislation has been approved by Parliament. HM Treasury has publicly announced its intention to lay the relevant secondary legislation (under section 71A of FSMA) but has not yet done so.
It may be necessary for the PRA to make consequential amendments to the rules published with this policy statement, in particular to any cross-references, in order to reflect the rules made (or subsequently made to implement the outstanding aspects of the regime). Any such consequential amendments will be addressed when the PRA makes its consequential amendments further to CP28/14.
Readers may also find it useful to refer to the FCA’s website.
Forms referred to in Appendix 1