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UK Government mitigates financial regulation regime

Senior managers are now subject to a ‘duty of responsibility’ rather than trying to prove they have done the correct thing.

Top bank bosses will now face scrutiny under new regime which intends to make banks more accountable.

The Treasury has also announced that the regime would be extended to other areas of the financial services industry, requiring them only to take appropriate steps to prevent a regulatory breach.

Rob Moulton, regulatory partner at Ashurst lawyers, said the regulator’s powers had been curbed; “this is a great step forward, and signals a pivotal moment in the relationship between the government and the regulators. There is no doubt who is the boss now.” The accountancy body the ICAEW said senior managers would be “breathing a huge sigh of relief” [1].

From March 2016, a ‘senior managers and certification regime’ is being introduced for banks, building societies, credit unions and some investment firms.

Around 60,000 firms will eventually be covered from the 1,500 originally foreseen.

The changes came as the Prudential Regulation Authority also announced its next steps to implementing another proposal from Sir John Vickers in 2011, to make banks separate their high street operations from riskier investment banking operations. This is explained in a previous article.

Oliver Parry, senior corporate governance adviser at the Institute of Directors, welcomed the move to drop the ‘ridiculous’ requirements and called for non-executive directors to be excluded [1].

[1] The Guardian. ‘UK government waters down financial regulation regime’. http://www.theguardian.com