The U.K.’s Finance Ministry is planning to toss out a key part of the Senior Managers Regime (SMR) that would treat senior bankers as ‘guilty until proven innocent’. This move comes at a time where the financial industry is gearing up to tackle new regulatory changes that will hold bankers accountable for their actions. A Reuters report said that the U.K. government is looking to soften the blow of the financial regulation regime and ease the mounting industry concerns that may drive top talent away from London.
The Treasury said that under a new parliamentary bill, it was expanding rules to make individual senior managers responsible for misconduct that occurs under their watch to include other parts of the financial services industry such as asset managers, hedge funds and other bank clients, the Reuters report said.
The spotlight is still on senior managers, however, who will have a “duty of responsibility” across the financial services industry to take the right steps that will hinder or prevent misconduct.
A rule that required senior managers to provide sufficient proof that they had taken the appropriate measures to deter a regulatory breach has been scrapped. It will now be up to the regulators to determine if the right steps were in fact taken to prevent wrongdoing.
Under the SMR, the financial agency is encouraging top-level managers to provide a clear distribution of their responsibilities to key decision- makers, which will boost individual accountability through ongoing assessments by the firm and regulators, says FCA.
The regulator is requiring that senior managers who are “capable of causing significant harm” to a financial institution and its stakeholders be annually assessed and certified according to the watchdog’s guidelines. To complement the SMR, the Certification Regime gives firms full responsibility to regularly-assess and certify key employees who can “risk the integrity of financial markets.”
The new rules are slated to go into effect by 2016.