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On May 4, 2016, the Bank of England and Financial Services Act
2016 was passed by the UK Parliament. The Act includes amendments
to the Senior Manager and Certification Regime and extends the
SM&CR to all UK authorized firms. The amendments include
removing the presumption of responsibility for a senior manager
when a breach of regulatory provisions occurs in the area that he
is responsible for, replacing it with a duty of responsibility. For
a senior manager to be found guilty of misconduct by one of the UK
regulators, the PRA and/or Financial Conduct Authority will need to
prove that a senior manager did not take reasonable steps to
prevent the contravention by his firm from occurring or continuing.
In addition, the UK regulators are granted specific powers to take
enforcement action against all non-executive directors of firms for
their misconduct. The extension of the SM&CR follows from the
recommendations of the Fair and Effective Markets Review, published
in June 2015, that the regime should be extended to wholesale
participants in the fixed income, currency and commodity
markets.
Certain provisions of the Act came into effect immediately. It
is not yet known when the extension to all UK authorized firms will
occur but the UK regulators have mentioned 2018 in the past. On May
10, 2016, two pieces of secondary legislation in the form of an
Order and Regulations brought the revised provisions published in
the Bank of England and Financial Services Act 2016 on senior
manager misconduct into force.
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Michael Tang - Global Financial Services Digital Transformation Leader, Aug 2017 (Video)
