So, the government is scrapping its ‘guilty until proven innocent’ proposal for top bankers.Thank goodness.
Rather than bankers being required to disprove their guilt, regulators will, actually, have to prove shortcomings. Regulators will need to show that senior managers have failed to take reasonable steps to prevent regulatory breaches in their areas of responsibility.
That must be right. While it’s true that in the last few years quite a few bankers have done quite a few bad things, presuming guilt is surely wrong.
What’s important as well is that the rules governing bankers’ behaviour are tightening – and these rules are being extended across the financial services industry.
The government is proposing to extend the new Senior Managers and Certification regime to all sectors within financial services.
The main features will include: the statutory requirement for senior managers to take steps to prevent regulatory breaches; an approval regime focused on senior management, with requirements on firms to provide detailed documentation on the scope of these individuals’ responsibilities; a requirement on firms to certify as fit and proper any individual who performs a role that could cause significant harm to the firm or its customers, both on recruitment and, then, annually; and authority for the regulators to apply enforceable Rules of Conduct to any individual who can impact their respective statutory objectives.
It’s proposed that this regime will come into operation on 7 March 2016 for banks, building societies, credit unions and Prudential Regulation Authority regulated investment firms.
The plan is for it to take effect for hedge funds, asset managers and the rest of the financial services industry in 2018. That may be a few years off, but affected firms are going to have to do a lot of work to ensure that their senior staff’s responsibilities are clarified and that systems and processes are all in order.
Expect, too, that some senior managers may not relish this extra responsibility and liability, and could, possibly, go in pursuit of jobs abroad.
The bankers have been bashed. Others in financial services could be under fire next.