UK regulators propose ending extra checks for about 140,000 managers

The Bank of England and Financial Conduct Authority (FCA) have proposed removing about 140,000 financial-sector managers from enhanced accountability checks, the Guardian reported on 22 October. The plans would also narrow the misconduct that firms must report to regulators, while retaining stricter requirements for the most senior executives.

The measures took effect in the mid-2010s after the 2008 banking crash. The senior managers regime was intended to address how few bank bosses were held accountable for actions that contributed to the crisis. It initially covered banks and later expanded to all financial-services companies, including asset managers and hedge funds.

Which checks and reports would remain?

Only the most senior executives, such as chief executives and chief financial officers, would still have to demonstrate that they are “fit and proper” each year and before taking new jobs. About 140,000 other managers would no longer undergo these enhanced checks, which require them to demonstrate integrity and compliance with regulators’ conduct rules.

For lower-level staff, firms would no longer need to report first warnings or misconduct considered of limited relevance to regulators’ objectives, such as lateness or dropping calls. Firms would still have to report serious misconduct and cases resulting in a final warning or dismissal. Initial misconduct cases involving top executives, including chief executives and chief financial officers, would also remain reportable.

A separate expansion of workplace misconduct rules

These proposals are distinct from the FCA’s decision to extend non-financial misconduct rules beyond banks to hedge funds, asset managers and insurers, reported by the Guardian on 13 October. Those rules address behaviour such as racism, sexual harassment, violence and intimidation.