CITY lawyers are warning today that new regulations for top bank staff could spark an increase in the number of legal claims over firings.
GQ Employment Law, a specialist employment law firm, says that the Senior Managers Regime, set to go into effect next March, may have unintended consequences. Under the new rules, senior managers at banks will be held accountable to the Financial Conduct Authority (FCA) and the Prudential Regulatory Authority (PRA) for any regulatory violations that occur within their areas of responsibility.
GQ says that as a result, managers will need to demonstrate that they have taken “reasonable steps to prevent the breach of regulatory requirements” — which could lead to pre-emptive firings.
Jon Gilligan, a partner at GQ Employment Law, said: “The risk is that managers will act in haste and that unfair dismissal or constructive dismissal claims will follow.
“The FCA’s and PRA’s determination to create much more individual responsibility for any failures that occur in the banking sector is likely to cause considerable upheaval throughout the City.”