UK to relax post-2008 rules that hold City bosses accountable for wrongdoing

The senior managers regime was meant to address the fact that few bank bosses were held to account for actions that contributed to the 2008 banking crash.

While the regime originally covered banks, it was later expanded to cover all financial services companies including asset managers and hedge funds.

The proposals, announced at a dinner for City executives at the Mansion House in central London, would require only the most senior executives – such as chief executives and chief financial officers – to be forced to prove they are “fit and proper” each year, and before taking new jobs.

This will free about 140,000 staff from having to illustrate they are operating with “integrity” and following regulators’ conduct rules.

Reduced reporting and cost savings

The new changes will also lead to the loosening of rules around how often firms report bad behaviour by lower level staff.

They will no longer have to report first warnings or “lower-level misconduct of limited relevance” to regulators, such as if staff are showing up late or dropping calls.

Instead, they only want to hear about “serious misconduct” and cases where staff are given final warnings or fired.

Any initial cases of misconduct will still have to be flagged for top brass, including chief executive and chief financial officers.

The regulators said removing these “unnecessary burdens” would save businesses about £2bn over 10 years while cutting the Bank of England’s and FCA’s costs by £11.5m and £229m each year, respectively.

The high standards of individual accountability and conduct will remain unchanged, including the regulators’ commitment to ensuring that individuals are accountable for misconduct that affects society as well as their employers.