Advisers have escaped being caught by reforms that would have seen the entire approved persons regime scrapped and replaced with a new regime.
In its response to the parliamentary commission on banking standards, published yesterday, the FCA states that the new regime will only apply to deposit-taking institutions such as banks, building societies and credit unions.
In July, the Treasury said it would be easier to introduce the approved persons regime for all financial services staff and suggested the regime would be abolished.
The approved persons regime could still apply more widely if the Government introduces changes in the Banking Reform Bill.
The FCA response states: “The senior persons regime would only include the most senior individuals within deposit-taking institutions. The existing approved persons regime will continue to apply to all non-deposit-taking entities.
“Individuals holding posts that oversee both deposit-taking and non-deposit-taking institutions within a banking group may be subject to both the new senior persons regime and the existing approved persons regime.
“There may also be people who perform the same role in different institutions, but are subject to different regimes depending on the permissions of their employer.”
As recommended by the PCBS, the regulator will also introduce a licensing regime for bank staff, which will apply to a wider number of people than the current approved persons regime.
Senior persons in banks will require pre-approval by the regulator and face criminal sanctions if they recklessly mismanage a bank.
The FCA has launched a blitz of consultations and reviews including whether to introduce bigger fines, pay whistleblowers and broaden access to the Financial Ombudsman Service.
The regulator will also conduct a follow-up review on removing barriers to entry for new banks and will report to Parliament next year.
It says it supports a more diverse sector and will report to Parliament within four years on its progress in boosting competition.
The FCA rejected the PCBS’s proposals to bring in a new code on pay and insisted its existing framework, introduced in 2009, is enough.
It also wants to double the length of time the regulator has from first learning about possible misconduct to bringing enforcement action from three to six years.
PCBS chair Andrew Tyrie says: “The support of the Bank of England and the FCA for a number of the Banking Commission’s key recommendations is welcome. In particular, they accept the need to replace the wholly discredited approved persons regime and the importance of competition as a regulatory objective.
“They have expressed general support in a number of other areas. What we now need to see is this support translated into action. It is clear that much more work remains to be done.”