Blog : BOARD TALK
|Posted on October 15, 2015 at 11:00 AM|
High-level meetings between banks and the Bank of England (as reported in the Financial Times) doubtless played a part in the UK Treasury's abandonment of the "reverse burden of proof" rule introduced in the new Senior Managers Regime.
In a bid to further strengthen the focus on accountability, executives would have had to prove they had taken all steps to prevent regulatory breaches, rather than leaving it to the regulator to make a case.
Now it is clear the UK watchdog, the FCA - currently headed by Tracey McDermott after it was made clear by the Treasury that Martin Wheatley had outstayed his welcome - is under renewed pressure.
This morning the FCA released this statement:
'Following reports in the press about HM Treasury’s intention to extend and make changes to the Senior Managers’ and Certification Regime, Tracey McDermott, acting chief executive of the FCA, said:
'Extending the senior managers’ and certification regime is an important step in embedding a culture of personal responsibility throughout the financial services industry.
While the presumption of responsibility could have been helpful, it was never a panacea. There has been significant industry focus on this one, small element of the reforms, which risked distracting senior management within firms from implementing both the letter and spirit of the regime. The senior managers’ and certification regime is intended to deliver better decisions to help avoid problems arising. We remain committed to holding individuals to account where they fail to meet our standards."
Hard on its heels, the Institute of Directors (IOD), welcoming the removal of the 'reverse burden of proof' requirement from the proposed Senior Managers Regime, has called on lawmakers to follow this up by taking non-executive directors out of the rules.
While first expressing support for the plans to hold senior executives and decision makers to account, the IOD stresses the focus should be on overhauling the culture of banking in the UK. "This is something no amount of regulation can achieve " says Oliver Parry, senior corporate governance adviser.
“The fact that non-executive directors are still wrapped up in the scope of the Senior Managers Regime remains a major concern. Non-executive directors do not have the same responsibilities or decision-making powers as executives who run the businesses on a day-to-day basis. Including non-executive directors within the Senior Managers Regime is too much, and we would urge the regulators to reconsider" he adds.
Pity the regulator. And get a whiff of the strong smell of lobbying.