FCA Senior Managers and Certification Regime – 3.0 From the UK with Love


The SM&CR was developed as a result of the 2008 financial crisis and the outcry from the public following its perception of the lack of accountability and punishment of those running and controlling the banks and other financial sector firms, whilst by way of the ripple effect, the public paid the economic price for the actions of these banking officials and the reckless manner in which they ran their businesses.

The International Domino Effect

The growing and rapid changes within the finance sector, has seen a notable trend in regulators from multiple jurisdictions focusing on the importance of a firm’s culture and conduct and the accountability of the individuals running these firms.

Whilst the specifics of the regulations may have some jurisdictional nuances, since the SM&CR was introduced in the UK, we have seen similar regimes popping up other countries such as Australia and Hong Kong, with the aim being the same, to improve accountability by imposing stronger consequences for conduct that is not in line with the standards expected by the regulators, in order that they can create a sounder financial market, improve consumer confidence and eradicate consumer detriment at the hands of those in charge of financial institutions.

Whilst in the UK we have the SM&CR, in Hong Kong it is the Manager In Charge Regime (MICR) and Australia has the Banking Executive Accountability Regime (BEAR).  As yet Singapore has not implemented an official regime, there is an emerging trend putting greater emphasis on executive accountability as well as conduct and culture.

The USA also responded in a similar way. On September 9 2015, Sally Quillian Yates, the Deputy Attorney General, issued a memorandum titled “Individual Accountability for Corporate Wrongdoing.” Whilst the memo issued by Yates was in response to criticism about the lack of individual prosecutions in the aftermath of the 2008 financial crisis, it also applied to other sectors.

Although the U.S. Department of Justice (DOJ) has long enforced a policy of holding individuals and corporations criminally and civilly liable for corporate misconduct, the ‘Yates Memo’ announced the implementation of more aggressive enforcement policies for corporate and individual prosecution.

So, the USA, UK and Asia all now appear to be singing from the same song sheet. The question is how long before the rest of the world follows suit and introduce similar regulations? Undoubtedly it won’t be long before individual accountability for those who are entrusted with running financial institutions and managing the public’s money will be held personally accountable no matter where they work in the world, at least we should hope so!

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