The Financial Conduct Authority and the Prudential Regulation Authority have today (13 August) published “near final rules” on bolstering accountability of top dogs at overseas banks with UK branches.
The publication follows joint FCA-PRA final rules on improving individual accountability in the UK banking sector, which was published on the 7 July, which looked at top executives at UK banks.
However the FCA and PRA’s new certification regime for UK banks also applied to other staff who could pose a risk of “significant harm” to the firm or any of its customers.
The FCA states these other members of staff include those who give investment advice or submit to benchmarks.
The rules stated that while bank’s investment advisers will not need to be pre-approved by regulators, the big high street names must put in place procedures for assessing for themselves the fitness and propriety of staff, for which they will be accountable to the FCA and PRA.
The latest paper from the FCA sets out the standard of behaviour expected of those in positions of responsibility at overseas banks with UK offices and insurers affected by Solvency II, but did not spell out any rules for their investment advisers.
Under the new regime, which will come into force on 7 March 2016, senior managers at overseas banks operating in the UK will be held individually accountable for the areas they are responsible for.
Michael Ruck, a senior financial services enforcement lawyer at Pinsent Masons, said only time will tell if the new requirements provide the clarity and certainty aimed for by the UK regulators.
“There continues to be room for some interpretation and flexibility in how firms apply the requirements. This will require input from the business and external advisers culminating in a conversation with the regulators to identify their view on the firm’s proposals for application of the regime.”
It was back in June 2013 that the Parliamentary Commission for Banking Standards published a report 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 to replace the approved persons regime for banks, building societies, credit unions and PRA-designated investment firms with a new regulatory framework for individuals.
emma.hughes@ft.com
