Known as the Senior Managers Regime and the Senior Insurance Managers Regime, both new governance rules will hold individuals working at all levels within relevant firms to appropriate standards of conduct.
“At the heart of the new accountability regime, which comes into force today, is one very simple principle – you can delegate tasks but you cannot delegate responsibility,” said Andrew Bailey, deputy governor for prudential regulation at the Bank of England and chief executive of the PRA.
Bailey, who is shortly to become chief executive eof the FCA, said this means that senior managers at banks and insurers should know what they are responsible for and can be held accountable for failings in their area.
“This is a crucial milestone in our drive for greater accountability in financial services,” he said.
The new rules were formulated after a report by the Parliamentary Commission for Banking Standards (PCBS) published in 2013. which set out recommendations for legislative and other action to improve professional standards and culture in the UK banking industry.
The FCA said in a statement the PRA and FCA will apply key principles of the Senior Managers Regime to top level members of staff in both regulators.
As a subsidiary of the FCA, the Payment Systems Regulator (PSR), has also applied the Senior Managers Regime internally.
“We are determined to embed a culture of personal responsibility within the banking sector,” said Tracey McDermott, currently acting chief executive at the FCA.
We hold ourselves to the highest professional standards and so we have decided to apply the fundamental principles of the Regime to our senior staff.
“By building on our existing framework of accountability, we will further bolster the transparency with which we are run, and reinforce the standards to which we hold ourselves,” she said.