07 March 2016

Bank of England: New accountability regime for banks and insurers comes into force

In June 2013, the Parliamentary Commission for Banking Standards (PCBS) published its report “Changing Banking for Good” setting out recommendations for legislative and other action to improve professional standards and culture in the UK banking industry.  This was followed by legislation in the Banking Reform Act 2013.  The launch of the new regime by the Prudential Regulation Authority and Financial Conduct Authority implements the recommendations made by the PCBS. 

As previously announced, the PRA and FCA will apply key principles of the Senior Managers Regime to senior members of staff in both regulators. The PRA and FCA have published an explanation of how they will be applying the regime internally. This includes a description of the core responsibilities of those carrying out Senior Management Functions.

The internal application of the Senior Managers Regime reflects the PRA and FCA’s functions as public authorities and regulators.  The wording of responsibilities has been tailored to ensure it is relevant to the particular functions the PRA and FCA have as regulators.

As a subsidiary of the FCA, the Payment Systems Regulator (PSR), has also applied the Senior Managers Regime internally.

Tracey McDermott, Acting Chief Executive at the Financial Conduct Authority, said:

“Today marks the beginning of a new era of increased individual accountability. The Senior Managers regime is not designed to re-invent the way that firms organise themselves but to reflect and ensure clarity about how this operates in practice.”

Andrew Bailey, Deputy Governor, Prudential Regulation, Bank of England and CEO of the PRA said:

“At the heart of the new accountability regime, which comes into force today, is one very simple principle - you can delegate tasks but you cannot delegate responsibility. This means that senior managers at banks and insurers should know what they are responsible for and can be held accountable for failings in their area. This is a crucial milestone in our drive for greater accountability in financial services.”

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© Bank of England