By Dan Smith

In 2013, the Parliamentary Commission on Banking Standards (PCBS) published a report concluding that senior management in the banking sector “benefited from an accountability firewall between themselves and individual misconduct”. The PCBS recommended a new regime be created to improve senior management responsibility.

The Financial Services (Banking Reform) Act 2013 created the legislative framework for the new regime, which includes the Senior Managers’ Regime (SMR), to replace the existing Approved Persons Regime (alongside a Certification Regime for other staff and certain changes to the Conduct Rules). The SMR will require relevant firms to notify the PRA and FCA of approved persons by 8 February 2016, and will come into force on 7 March 2016.

In July 2015 the FCA published final rules on individual accountability in the banking sector. Guidance on the presumption of responsibility and on enforcement-related matters is expected in Autumn 2015. However, firms to whom the SMR will apply should consider now how best to prepare.