UK Financial Regulation Changes – update

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Financial Conduct Authority

On the 16th March the FCA released a press release confirming their plans for changes to the regulation framework in the UK.

The key points are:

• These are “near-final rules”, the full details regarding the framework and transition will be published in spring/summer of 2015 with implementation scheduled for March 2016

Senior Managers Regime – those individuals with responsibility for running areas of the firm. The regime requires a clear allocation and definition of responsibilities across these people. The regulators will have stronger powers of approval and enforcement. Members of the Senior Managers Regime will need to be approved by the FCA. Non-Executive Directors will not fall into this regime unless they are performing “delegated responsibilities”. This is a change from the original proposal. The fitness and propriety assessment will be undertaken at the initial application and on an ongoing basis, all with an aim to strengthen individual accountability.

Certification regime: this covers the firms’ employees who could cause significant harm to the firm or its customers. Each firm will be responsible for assessing these individuals’ fitness and propriety at least annually. It will be the firms’ responsibility to maintain this regime. These individuals will not go through approval directly with the FCA.

• Fitness and propriety requirements will extend across the Senior Managers Regime and the Certification Regime.

• Conduct rules will apply to most staff within these firms. The only exempt employees will be those performing purely ancillary functions (roles which would be the same when performed in non-regulated organisations).

The FCA has also published the following papers:

CP15/9 Strengthening accountability in banking: a new regulatory framework for individuals – Feedback on FCA CP14/13 / PRA CP14/14 and consultation on additional guidance.

CP15/10 Strengthening accountability in banking: UK branches of overseas banks.

HireRight are reviewing the consultation papers and will continue to monitor the situation.

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The HireRight Blog is provided for informational purposes only and should not be construed as legal advice. Any statutes or laws cited in this article should be read in their entirety. If you or your customers have questions concerning compliance and obligations under United States or International laws or regulations, we suggest that you address these directly with your legal department or outside counsel.

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