Heightened scrutiny of bank chairmen
UK REGULATORS will heighten oversight of bank chairmen and other key non-executive directors as part of new accountability rules that threaten enforcement action for those found guilty of allowing misconduct to happen.
Six categories of non-executives, including the chairman and chairs of the risk, audit and remuneration committees, will fall within the scope of the Senior Managers Regime, the UK Financial Conduct Authority said yesterday.
The final rules will be introduced in 2016.
The measures implement recommendations made in 2013 by UK politicians to address standards and culture in the wake of scandals including the rigging of the London interbank offered rate.
Firms will need to provide regulators with statements of each senior manager's responsibilities, with the onus on those executives to prove they took all reasonable steps to prevent wrongdoing in the event misconduct occurs.
The rules include potential jail sentences for bankers who take risks leading to the failure of their firm.
"Non-executive directors play a vital role in providing challenge to and an independent oversight of the executive directors," FCA chief executive officer Martin Wheatley said.
"Including all NEDs in the new regime would risk the unintended consequence of changing the whole nature of this vital role."
The FCA and the UK Prudential Regulation Authority, in charge of implementing the rules, will have to approve all individuals holding positions that fall under the Senior Managers Regime. Non-executive directors that fall outside the scope of the UK rules will still be covered by EU standards.