Legal advice after baby loss
A written statement by the Economic Secretary on 3 March 2015 announced the timetable for the introduction of the Senior Managers and Certification Regime (SM&CR) under the Financial Services (Banking Reform) Act 2013. The Government also announced that following a period of consultation it had decided to extend the SM&CR to UK branches of foreign institutions.
The SM&CR aims to strengthen the accountability of bank senior management and to raise standards of individual conduct in the banking sector and will come into operation on 7 March 2016.
The basic elements of the SM&CR are:
The statement acknowledges that the SM&CR will be a “major reform with significant implications for the firms concerned (banks, building societies, credit unions and investment firms regulated by the PRA and for the individuals, particularly senior managers, who work in those firms.” In order to facilitate the transition from APER, firms will be required to notify the regulators by 8 February 2016 of the approved persons who are to be Senior Managers under the SM&CR.
It was also announced that the PRA and FCA will shortly be consulting on additional rules to ensure that the SM&CR is applied in an “appropriate and proportionate way to foreign institutions operating through branches in the UK.”
The commencement order will also bring sections 36 to 38 of the Act into force from 7 March 2016 – this is the new criminal offences relating to decisions causing a financial institution to fail and means that the offence could apply to decisions taken by Senior Managers in UK banks, building societies and PRA-regulated investment firms (but not credit unions or any foreign institutions) on or after that date.
On 24 February, the FCA and PRA published a joint paper entitled “Approach to non-executive directors in banking and Solvency II firms & Application of the presumption of responsibility to Senior Managers in banking firm”. For more information please see our previous blog titled, 'Senior Managers Regime: Tougher regulation of senior bankers and non-executive directors (NEDs) confirmed' and an article written by Louise Hodges published in Economia on 26 February 2015 titled 'Why NEDs need protection'.
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