UK to loosen senior managers regime that holds City bosses accountable
The Bank of England and the Financial Conduct Authority have proposed relaxing the senior managers regime, the post-2008 rules holding City bosses accountable for wrongdoing, freeing about 140,000 managers from extra checks.
UK to loosen senior managers regime that holds City bosses accountable
What the proposals would change
The plans put forward by the Bank of England and the Financial Conduct Authority (FCA) would significantly cut the number of roles required to undergo enhanced checks, and include a reduction in reporting of lower-level misconduct. Under the proposals, only the most senior executives - such as chief executives and chief financial officers - would have to prove they are "fit and proper" each year and before taking new jobs.
- Firms would no longer report first warnings or lower-level misconduct of limited relevance, such as lateness or dropping calls, to regulators.
- Regulators would only hear about serious misconduct and cases where staff receive final warnings or are fired.
- Initial misconduct cases would still have to be flagged internally to top executives, including the chief executive and chief financial officers.
- About 140,000 staff would no longer need to show they operate with integrity and follow regulators' conduct rules.
The announcement was made at a dinner for City executives hosted at the Mansion House in central London.
Rules born of the 2008 crash
The measures being watered down came into force in the mid-2010s, in response to widespread public anger over the 2008 banking crash. The senior managers regime was meant to address the fact that few bank bosses were held to account for actions contributing to the financial crisis. Originally covering banks, it was later expanded to all financial services companies, including asset managers and hedge funds.
Wider deregulation push and claimed savings
The rollback follows the government giving regulators a new objective: ensuring UK firms are competitive on the world stage. It comes after previous deregulation lifted the cap on banker bonuses, which were previously limited to two times a banker's salary. The regulators said removing these burdens would save businesses about £2bn over 10 years, while cutting the Bank of England's and FCA's own costs by £11.5m and £229m each year.
Regulators' response to accountability concerns
The Bank of England and FCA said the changes would not mean bosses get away with bad behaviour. In a joint statement, they said that "high standards of individual accountability and conduct will remain unchanged". The regulators also affirmed that individuals are accountable for misconduct that affects society as well as their employers.
