Insurance Execs May Also Face U.K. ‘Duty of Responsibility’ Bank Rules

October 15, 2015 by Robert Hutton

Executives at UK insurers, mortgage brokers and payday-loan companies will be covered by the same “duty of responsibility” as those in banks under legislation introduced in Parliament Thursday.

The Bank of England and Financial Services Bill, which will be introduced to the House of Lords, will extend the Senior Managers and Certification Regime across the entire financial-services industry. All will have a new responsibility to take steps to prevent rules being broken.

“A key part of the government’s long-term plan is to restore trust in Britain’s financial-services sector so that it works better for customers and businesses,” the Treasury said in an e-mailed statement. “Ensuring that these firms are properly run is vital for the health of our economy.”

The bill is designed to implement Bank of England Governor Mark Carney’s expanded remit. Carney is leading a push to clean up an industry tarnished by scandals such as benchmark rigging that also damaged the reputation of the central bank.

The new regime is due to come into effect in March 2016 and banks are in the midst of mapping out who is responsible for which areas and personnel to present to the regulator.

“Extending the Senior Managers and Certification Regime is an important step in embedding a culture of personal responsibility through the financial services industry,” Tracey McDermott, acting chief executive officer of the Financial Conduct Authority, said in an e-mailed statement.

“The new Senior Managers and Certification Regime is stronger than the Approved Persons Regime that has been in operation since before the financial crisis,” Andrew Bailey, the BOE’s deputy governor and CEO of the Prudential Regulation Authority, said in a separate e-mailed statement. “We strongly support this strengthening.”

Separately on Thursday, the PRA, part of the BOE, will publish a consultation paper on plans to ring fence banks, another step in regulators’ efforts to prevent a repeat of the financial crisis. That move is aimed at ensuring that crucial financial services such as retail deposits and payments will be protected if riskier units incur losses and have to be shut down.