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Govt to scrap ‘failed’ approved persons regime

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The Government has today pledged to scrap the “failed” approved persons regime for all regulated financial services staff in sweeping reforms of the industry.

In its response to the parliamentary commission on banking standards, published today, the Government says it will work with the Financial Conduct Authority and Prudential Regulation Authority to introduce a new regime.

The change will come as an amendment to the banking reform bill currently progressing through the House of Commons.

The commission recommended introducing a senior persons regime and licensing regime only for bankers but the Government says it would be simpler to address the whole financial services industry.

The senior persons regime would see senior staff subject to a more rigorous registration process while more financial services staff will be covered by the licensing regime than the current authorisation process.

The Government response states: “While the Commission’s recommendations relate to standards in the banking sector, they consider it plausible that the weaknesses of the approved persons regime affect not just the banking sector but other parts of the financial services industry too.

“The Government agrees with this and notes that many of the failures identified by the Commission were not limited to the banking sector.”

The Government has pledged amendments to introduce a criminal offence for reckless bankers. It will also allow regulators to delay bankers’ bonuses for up to 10 years, plus 100 per cent clawback on pay and pensions for executives at failed banks.

The response also backs introducing a secondary competition objective to the Prudential Regulation Authority and examine a shake-up of the payments system to encourage account switching.

However, the Government has refused to budge on the commission’s recommendation to strengthen banks’ leverage ratios and bring it in sooner. The financial policy committee will be given the power to vary leverage ratios from 2018.

There was also no specific action on whistleblowing but only that it would consider it as part of a wider business review into encouraging whistleblowers.

Chancellor George Osborne says: “Cultural reform in the banking sector marks the next step in the Government’s plan to move the whole sector from rescue to recovery and ensure that UK banks demonstrate the highest standards, and are able to support business and drive economic growth.”

An FCA spokesman says: “We will consider the recommendations in further detail and publish our considered and detailed response in the autumn.”

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Comments

There are 8 comments at the moment, we would love to hear your opinion too.

  1. More fees, more money, more form filling.
    Meanwhile, the fca will continue to hide behind “collective intellectual failure” while standing in line for their own bonus.
    If it is good for the goose… when the government and regulatory bodies take responsibility for their own reckless behaviour, proposals like this may be deemed fair.Until then it will simply be seen as handing more control to an out of control quango.

  2. Does anyone know of any financial regulation that has been a roaring success in the past 10 years???
    Or is the majority of regulation as above deemed to have “failed”

  3. Oh, I don’t know. £3mill a year and a K. Failure – Naa!

  4. The only thing that has failed is how the regulator has treated approved persons. They have personal responsibility, it’s just never been enforced in any meaningful way. How on earth will this change anything? It seems like the only thing to change will be the boxes on a form, unless the powers that be decide to actually envoke their statutory ‘powers’, which they should have been doing all along!

  5. If the scrapping of this has the same effect as scrapping of the FSA then it will be a total waste of time as it will be of no benefit to wider society than what is already there. hashtag anotherquangoanyone? I do apologise if I have not used the hastag thing in the right context as I am probably too old for this type of thing but I think its whatthe younger generation may say. (smiley face)

  6. Rob Derry (Brunel Mortgages & Loans) 9th July 2013 at 10:02 am

    Like many things, the system doesn’t need “scrapping”, it just needs changing. What needs to change is the accountability of senior people.
    Is there also any real need to bring more and more people in to this system? If you look at other professions like accountants, solicitors, even doctors not everyone that works in their offices needs to be licensed – but the qualified, senior people take responsibility.
    If there is proper enforcement of responsibility and accountability for poor practice, poor systems and inadequate controls among the senior people at a firm, you don’t need the huge expense of licensing every single individual that works within half a mile of a mortgage application form or an insurance policy document.
    By all means, train people but the licensing should be directed at the people who are responsible and accountable for the actions and outcomes of a financial services business.

    We don’t need to re-invent the wheel here. But what we do have currently is a wheel that isn’t quite round – just re-shape it.

  7. You are not allowed to use the FCA trademark unless the regulator has licensed you to do so.

  8. Adviser numbers have reduced; bank staff numbers have reduced and all of a sudden there need to be more people brought into the approved persons regime.

    The FCA job creation scheme rolls on and on. And on.

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