UK: Credible Deterrence; The Changing Approach Of The FCA And Future Trends For Individuals In MENA Enforcement

Following the 2008-09 financial crisis and scandals including PPI mis-selling and LIBOR manipulation, an enhanced focus has emerged from the UK regulator, the Financial Conduct Authority ("FCA") on the behaviour and culture within financial institutions. The FCA is paving the way for a new regime, which uses "credible deterrence" by focusing on the responsibility of individuals in order to change compliance culture. In essence, the FCA has recognised that even large fines have failed to change the culture within banks so has shifted its focus to the senior individuals.

In this article, we look briefly at the changes underway in the UK and expected to be in force by March 2016 (which are dealt with in more detail on page 6). We look at the impact that this is likely to have within regulatory regimes in the Middle East international financial centres, such as the DFSA, the QFC and forthcoming Abu Dhabi Global Market, which are to an extent modelled on, and share information with, the FCA and other international regulators.

Changes in the UK

As dealt with on page 6, in 2013 the Parliamentary Commission on Banking Standards recommended an overhaul of the current FCA Approved Persons Regime applying to the banking sector and its replacement with a Senior Persons Regime whereby key responsibilities within banks would be assigned to specific individuals.

While the drive to change culture in financial services is largely a product of the recent excesses of the banking industry, the insurance sector has not escaped increased regulatory scrutiny and the PRA and FCA have also proposed a new regime (from early 2016) for senior management individuals working in insurance companies. These proposals mirror some aspects of the more rigorous system of individual accountability proposed for banks but have, fortunately, avoided the more draconian requirements on the banking industry, including criminal sanctions and the reverse burden of proof.

Turning back to the banking sector, the FCA's March consultation paper included a set of proposals covered in more detail on page 6, including:

  • A "Management Responsibilities Map"
  • A "Statement of Responsibilities"
  • A fit and proper certification process for more junior employees who have a direct relationship with customers and who could pose harm to them
  • Introducing a "presumption of responsibility" placed on Senior Managers

Once this new regime comes into place, by 7 March 2016, there will be an increased focus on "leading from the top", management responsibility, tougher enforcement action and a focus on effective corporate governance.

The likely impact on certain regulatory regimes in the Middle East

We have seen an increased focus by the regulators in this region on the activities of financial institutions, the culture within those institutions and the conduct of management in nurturing effective governance and compliance.

Both the QFC and the DFSA are, broadly, modelled on the UK (and European) regulatory authorities and regularly liaise, share know-how and best practice methods with them.

When bringing enforcement action against individuals, these regimes currently place the onus on the relevant regulator to prove how an individual's actions or conduct fell below the standard reasonably expected. This is in contrast to the new regime expected to come into place in the UK whereby the presumption of responsibility will shift the onus upon the individual. However, regional regulators will be watching the UK developments closely.

In September 2014, the DFSA carried out a thematic review of corporate governance amongst its regulated firms. The DFSA generally found a good level of compliance with statutory obligations, and that governance structures and arrangements generally reflected the nature, scale and complexity of businesses reviewed.

However, the DFSA noted that governance arrangements and responsibilities did not always align with business plans and strategy. Additionally, the DFSA found that authorised firms often did not carry out structured, periodic reviews of their governing bodies and their committees, or their effectiveness.

There is already an increased focus by regional regulators on the responsibility of management individuals and implementing credible deterrence by attributing responsibility not just on firms, but also on individuals.

In contrast to early enforcement decisions issued by the DFSA which focussed primarily on the conduct of the institutions, it is clear they are now also pursuing enforcement against individuals. The recent decisions in April 2015 against Abdul Rahman Al Ansari and Anthony Robert D'Aniello are a case in point. Both were banned for knowingly providing false, misleading and/or deceptive information and failing to deal openly with the DFSA. That was despite the fact that the firm had been sanctioned during an earlier investigation and was no longer operating in the DIFC. The DFSA referred to "the fundamental issues of unalienable responsibilities of the firm and the senior management" in rejecting a defence that relevant tasks had been delegated to junior staff. A finding that these individuals are not "fit and proper" based on integrity issues will likely have an impact on their careers in any highly-regulated environment around the world.

Financial institutions, senior management individuals within them (and their D&O Insurers) need to be alive to the shift in focus on individual conduct and the regulatory changes occurring under the FCA regime, monitor developments and be aware of the possibility that similar changes will occur in the near future within the Middle-Eastern regulatory regimes. As the regimes develop, senior management individuals will need to ensure that they are taking an active role in managing their personal regulatory risk.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

To print this article, all you need is to be registered on

Click to Login as an existing user or Register so you can print this article.

In association with
Related Topics
Related Articles
Related Video
Up-coming Events Search
Font Size:
Mondaq on Twitter
Register for Access and our Free Biweekly Alert for
This service is completely free. Access 250,000 archived articles from 100+ countries and get a personalised email twice a week covering developments (and yes, our lawyers like to think you’ve read our Disclaimer).
Email Address
Company Name
Confirm Password
Mondaq Topics -- Select your Interests
 Law Performance
 Law Practice
 Media & IT
 Real Estate
 Wealth Mgt
Asia Pacific
European Union
Latin America
Middle East
United States
Worldwide Updates
Registration (you must scroll down to set your data preferences)

Mondaq Ltd requires you to register and provide information that personally identifies you, including your content preferences, for three primary purposes (full details of Mondaq’s use of your personal data can be found in our Privacy and Cookies Notice):

  • To allow you to personalize the Mondaq websites you are visiting to show content ("Content") relevant to your interests.
  • To enable features such as password reminder, news alerts, email a colleague, and linking from Mondaq (and its affiliate sites) to your website.
  • To produce demographic feedback for our content providers ("Contributors") who contribute Content for free for your use.

Mondaq hopes that our registered users will support us in maintaining our free to view business model by consenting to our use of your personal data as described below.

Mondaq has a "free to view" business model. Our services are paid for by Contributors in exchange for Mondaq providing them with access to information about who accesses their content. Once personal data is transferred to our Contributors they become a data controller of this personal data. They use it to measure the response that their articles are receiving, as a form of market research. They may also use it to provide Mondaq users with information about their products and services.

Details of each Contributor to which your personal data will be transferred is clearly stated within the Content that you access. For full details of how this Contributor will use your personal data, you should review the Contributor’s own Privacy Notice.

Please indicate your preference below:

Yes, I am happy to support Mondaq in maintaining its free to view business model by agreeing to allow Mondaq to share my personal data with Contributors whose Content I access
No, I do not want Mondaq to share my personal data with Contributors

Also please let us know whether you are happy to receive communications promoting products and services offered by Mondaq:

Yes, I am happy to received promotional communications from Mondaq
No, please do not send me promotional communications from Mondaq
Terms & Conditions (the Website) is owned and managed by Mondaq Ltd (Mondaq). Mondaq grants you a non-exclusive, revocable licence to access the Website and associated services, such as the Mondaq News Alerts (Services), subject to and in consideration of your compliance with the following terms and conditions of use (Terms). Your use of the Website and/or Services constitutes your agreement to the Terms. Mondaq may terminate your use of the Website and Services if you are in breach of these Terms or if Mondaq decides to terminate the licence granted hereunder for any reason whatsoever.

Use of

To Use you must be: eighteen (18) years old or over; legally capable of entering into binding contracts; and not in any way prohibited by the applicable law to enter into these Terms in the jurisdiction which you are currently located.

You may use the Website as an unregistered user, however, you are required to register as a user if you wish to read the full text of the Content or to receive the Services.

You may not modify, publish, transmit, transfer or sell, reproduce, create derivative works from, distribute, perform, link, display, or in any way exploit any of the Content, in whole or in part, except as expressly permitted in these Terms or with the prior written consent of Mondaq. You may not use electronic or other means to extract details or information from the Content. Nor shall you extract information about users or Contributors in order to offer them any services or products.

In your use of the Website and/or Services you shall: comply with all applicable laws, regulations, directives and legislations which apply to your Use of the Website and/or Services in whatever country you are physically located including without limitation any and all consumer law, export control laws and regulations; provide to us true, correct and accurate information and promptly inform us in the event that any information that you have provided to us changes or becomes inaccurate; notify Mondaq immediately of any circumstances where you have reason to believe that any Intellectual Property Rights or any other rights of any third party may have been infringed; co-operate with reasonable security or other checks or requests for information made by Mondaq from time to time; and at all times be fully liable for the breach of any of these Terms by a third party using your login details to access the Website and/or Services

however, you shall not: do anything likely to impair, interfere with or damage or cause harm or distress to any persons, or the network; do anything that will infringe any Intellectual Property Rights or other rights of Mondaq or any third party; or use the Website, Services and/or Content otherwise than in accordance with these Terms; use any trade marks or service marks of Mondaq or the Contributors, or do anything which may be seen to take unfair advantage of the reputation and goodwill of Mondaq or the Contributors, or the Website, Services and/or Content.

Mondaq reserves the right, in its sole discretion, to take any action that it deems necessary and appropriate in the event it considers that there is a breach or threatened breach of the Terms.

Mondaq’s Rights and Obligations

Unless otherwise expressly set out to the contrary, nothing in these Terms shall serve to transfer from Mondaq to you, any Intellectual Property Rights owned by and/or licensed to Mondaq and all rights, title and interest in and to such Intellectual Property Rights will remain exclusively with Mondaq and/or its licensors.

Mondaq shall use its reasonable endeavours to make the Website and Services available to you at all times, but we cannot guarantee an uninterrupted and fault free service.

Mondaq reserves the right to make changes to the services and/or the Website or part thereof, from time to time, and we may add, remove, modify and/or vary any elements of features and functionalities of the Website or the services.

Mondaq also reserves the right from time to time to monitor your Use of the Website and/or services.


The Content is general information only. It is not intended to constitute legal advice or seek to be the complete and comprehensive statement of the law, nor is it intended to address your specific requirements or provide advice on which reliance should be placed. Mondaq and/or its Contributors and other suppliers make no representations about the suitability of the information contained in the Content for any purpose. All Content provided "as is" without warranty of any kind. Mondaq and/or its Contributors and other suppliers hereby exclude and disclaim all representations, warranties or guarantees with regard to the Content, including all implied warranties and conditions of merchantability, fitness for a particular purpose, title and non-infringement. To the maximum extent permitted by law, Mondaq expressly excludes all representations, warranties, obligations, and liabilities arising out of or in connection with all Content. In no event shall Mondaq and/or its respective suppliers be liable for any special, indirect or consequential damages or any damages whatsoever resulting from loss of use, data or profits, whether in an action of contract, negligence or other tortious action, arising out of or in connection with the use of the Content or performance of Mondaq’s Services.


Mondaq may alter or amend these Terms by amending them on the Website. By continuing to Use the Services and/or the Website after such amendment, you will be deemed to have accepted any amendment to these Terms.

These Terms shall be governed by and construed in accordance with the laws of England and Wales and you irrevocably submit to the exclusive jurisdiction of the courts of England and Wales to settle any dispute which may arise out of or in connection with these Terms. If you live outside the United Kingdom, English law shall apply only to the extent that English law shall not deprive you of any legal protection accorded in accordance with the law of the place where you are habitually resident ("Local Law"). In the event English law deprives you of any legal protection which is accorded to you under Local Law, then these terms shall be governed by Local Law and any dispute or claim arising out of or in connection with these Terms shall be subject to the non-exclusive jurisdiction of the courts where you are habitually resident.

You may print and keep a copy of these Terms, which form the entire agreement between you and Mondaq and supersede any other communications or advertising in respect of the Service and/or the Website.

No delay in exercising or non-exercise by you and/or Mondaq of any of its rights under or in connection with these Terms shall operate as a waiver or release of each of your or Mondaq’s right. Rather, any such waiver or release must be specifically granted in writing signed by the party granting it.

If any part of these Terms is held unenforceable, that part shall be enforced to the maximum extent permissible so as to give effect to the intent of the parties, and the Terms shall continue in full force and effect.

Mondaq shall not incur any liability to you on account of any loss or damage resulting from any delay or failure to perform all or any part of these Terms if such delay or failure is caused, in whole or in part, by events, occurrences, or causes beyond the control of Mondaq. Such events, occurrences or causes will include, without limitation, acts of God, strikes, lockouts, server and network failure, riots, acts of war, earthquakes, fire and explosions.

By clicking Register you state you have read and agree to our Terms and Conditions