Transitional arrangements for the roll-out of new rules to encourage individual responsibility in banking have been published.
The FCA and the Prudential Regulation Authority have jointly published the consultation paper in response to the Parliamentary Commission on Banking Standards’ Changing Banking for Good report, published last year.
The proposals will mean a new senior managers regime will require firms to allocate a range of responsibilities to these people and regularly vet their fitness and propriety.
A new certification regime will require firms to assess the fitness and propriety of certain employees who could pose a risk of significant harm to the firm or any of its customers.
Under the transitional arrangements the FCA and PRA will not expect people who have been authorised under the current regime and whose roles are not substantively changing to apply for fresh approval.
However the regulators will have to be notified by the deadline of which functions will be performed by which individual.
The requirement to obtain references from previous employers under the certification regime would not apply to employees who are already performing the role at the point when the rules come into force.
The report said: “Individual accountability will be enhanced through a range of measures, including identifying the senior individuals who run banks and clarifying their specific responsibilities, the introduction of a legislative presumption that they should be held accountable if they fail to act reasonably in discharging those responsibilities and expanding the population in relevant firms subject to rules of conduct.
“This should have a positive impact on individual behaviour and the general culture within firms which, should, in turn, contribute to the advancement of both regulators’ objectives.”
Comments on the proposals can be submitted by 27 February.
The PRA and FCA plan to publish final rules in 2015.
