CP14/13: Strengthening accountability in banking: a new regulatory framework for individuals

Published: 30/07/2014     Last Modified: 14/09/2015

In partnership with the Prudential Regulation Authority (PRA), we are consulting on a new way to hold individuals to account, following the recommendations of the Parliamentary Commission on Banking Standards.

Why are we consulting on this?

We – the FCA and PRA – believe that holding individuals to account is a key component of effective regulation.

In this consultation, we are proposing changes to the way individuals working for ‘relevant firms’ – ie UK banks, building societies, credit unions and PRA-designated investment firms – are assessed and held accountable for the roles they perform. The proposals reflect the recommendations of the Parliamentary Commission on Banking Standards (PCBS) and implement changes required by the amendments which the Financial Services (Banking Reform) Act 2013 (the Act) made to the Financial Services and Markets Act 2000 (FSMA).  

The paper can be read alongside CP14/14, which sets out our joint proposals for revisions to the current Remuneration Code.

Who is this Consultation Paper aimed at?

The proposals in this consultation relate to ‘relevant firms’. As well as the firms themselves, the proposals will affect a large number of individuals within those firms, including, but not limited to, all their existing approved persons. The proposals in this consultation do not extend to individuals and approved persons of Appointed Representatives of ‘relevant firms’. Consumers may be interested how individual accountability is being enhanced within relevant firms.

Consultation paper 14/13

What is the background to this?

The behaviour and culture within banks played a major role in the 2008-09 financial crisis and in conduct scandals such as PPI mis-selling and the attempted manipulation of LIBOR. However, under the statutory and regulatory framework in place at the time, individual accountability was often unclear or confused. This undermined public trust in both the banking system and in the regulatory response.

In June 2012, the Government established the PCBS to consider and report on these issues. It concluded that public trust in banking was at an all-time low and recommended a series of measures to restore trust and improve culture. These recommendations proposed a new framework for approving and holding individuals to account alongside other measures, including recommendations regarding remuneration and whistleblowing, latest documents below:

What are the next steps?

We want to hear what you think of our proposals. So please send your responses to both regulators at the following addresses CP14/14@bankofengland.co.uk and cp14-13@fca.org.uk by Friday 31 October 2014.

The regulators will share responses publicly, unless you specifically ask for them to remain confidential.

Please note that the consultation includes questions specifically posed by only one regulator as well as joint questions from both regulators. You should note that responses to:

  • PRA only questions will be considered by the PRA only
  • FCA only questions will be considered by the FCA only, and
  • responses to joint questions will be discussed by the PRA and FCA.

The PRA and FCA each plan to publish Policy Statement(s) containing their respective final rules around the end of the year.

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