New rules have U.K. bank execs scrambling for coverReprints
It used to be the case that banking was among the most ambitious of professions.
But new U.K. rules to hold bosses accountable for wrongdoing at banks are deterring some from taking on senior roles and is even prompting senior executives to play down their own importance, according to Reuters.
The Senior Managers Regime, which came into force Monday, is aimed at addressing public anger that few bankers were held to account after the 2008 financial crisis and scandals such as LIBOR and currency-market rigging, the newswire said.
The rules allow regulators to assign blame to named individuals rather than just firms.
And bankers deemed to exert “significant managerial influence” must sign up to a legal duty of responsibility and demonstrate what reasonable steps they took to prevent rulebreaking.
This, legal and compliance experts told Reuters, is prompting some firms to “juniorize” positions.
Some companies have seen staff become resistant to becoming senior managers because they are afraid of being made a scapegoat should something go wrong, one lawyer told Reuters.
And while sources said the rules will improve consumer protection, there is a risk that they may stifle competitiveness as legal teams become more involved in decision making.
But as famed British financial journalist Hartley Withers said more than 100 years ago: “good banking is produced not by good laws, but by good bankers.”