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Senior bankers “terrified” by accountability rules

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City bankers are said to be “terrified” of new accountability rules which came into force this week.

The new senior manager and certification regime came into effect for banks, building societies, credit unions and insurers on 7 March, and will be extended across financial services by 2018.

However, according to the Financial Times, bank bosses are already warning they may be so “terrified” of the new regime that decision making and risk taking may be impeded.

It comes in spite of a last minute amendment to the rules, removing a so-called “reverse burden of proof”, which would have required senior managers to prove they had taken all reasonable steps to prevent conduct breaches.

Instead, the FCA will have to prove managers failed to do so.

Speaking to the FT, Royal Bank of Scotland head of conduct and regulatory affairs and former FSA managing director of supervision Jon Pain said: “This is [already] a difficult industry to recruit non-executive directors into . . . If you terrify them with that level of evidence; you make their job almost impossible.”

Santander UK chief risk officer Keiran Ford added: “What I worry about is a big team from the FCA turning up at my offices with 30 guys to go through the minutes of every meeting to second guess a decision I made a few years ago.”

At the same time, however, the broad principles of the new regime won support, with Barclays deputy chairman Sir Gerry Grimstone noting that after the financial crisis “there’s a palpable sense that the people who perpetrated the misconduct have not been brought to book”.

Grimstone said: “The outliers must be dismissed from the City; we have no room for them. The risk is that the fines have become a cost of doing business . . . the focus needs to be on bringing the right people to book.”

The FCA revealed how it would apply the accountability rules to its own staff earlier this week.

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Comments

There are 3 comments at the moment, we would love to hear your opinion too.

  1. Perhaps an equivalent level of accountability is what prompted Tracey McDermott to withdraw her application to become the next CE of the FCA.

  2. Is it right and proper that the financial services industry is regulated on fear and terror ?

  3. “risk taking may be impeded”

    Yeah, that’s bad for what reason again?

    If we keep allowing banks to play ‘Russian roulette’ with the financial system, eventually our luck will run out and the legislators and central banks won’t be able to pull us back from the brink

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