The Prudential Regulation Authority and Financial Conduct Authority jointly published a consultation paper on strengthening accountability in banking, setting out the PRA and FCA’s proposed plans for extending and tailoring the Senior Manager’s Regime, Certification Regime and Conduct Rules to UK branches of nonEEA institutions. The proposals include: (i) incoming non-EEA branches to have their most senior individual approved by the PRA; (ii) senior managers of incoming branches to be subject to a set of PRA responsibilities which reflect areas subject to UK regulation; and (iii) for the scope of the PRA’s certification regime for incoming non-EEA branches to be identical to that of UK firms. The new Senior Managers and Certification Regime will apply from March 7, 2016. Comments on the consultation may be submitted until May 25, 2015.

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The UK Government published its response following the consultation to extend the Senior Managers and Certification Regime to UK branches of non-UK firms. The response announces that the Senior Managers and Certification Regime will apply from March 7, 2016 and be extended to apply to UK branches of banks and insurers established outside of the UK. On March 4, 2015, related secondary legislation was enacted which implements the extension and other provisions of the regime more generally. Relevant firms will need to notify the PRA and the FCA by February 8, 2016 of the approved persons who are to be senior managers under the new regime. The regulators consulted on proposed rules for the Senior Managers and Certification Regime in 2014 as it applied to UK banks and insurers but have waited to implement final rules pending the decision on whether the regime would be extended to UK branches.

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The Prudential Regulation Authority and Financial Conduct Authority published a joint consultation paper on: (i) the approaches to non-executive directors in banking and certain insurance firms; and (ii) the application of the presumption of responsibility to senior managers in banking firms. The consultation revises the proposed approach of the regulators to NEDs in UK banks, PRA-designated investment firms as well as certain insurance firms, such that only certain specified NEDs are subject to pre-approval and inclusion in the Senior Managers Regime. The specified NEDs would be: (i) chairman; (ii) chair of the risk committee; (iii) chair of the audit committee; (iv) chair of the remuneration committee; (v) chair of the nomination committee; and (vi) senior independent director. This narrows down the scope of the SMR, the new system that aims to better define the lines of responsibility at financial institutions so that senior individuals in banks can be held to account more easily. The paper also consults on a draft PRA supervisory statement, with the aim of clarifying the responsibilities of NEDs that are in scope of the SMR and explaining how the presumption of responsibility will be applied in cases of non-compliance with regulatory requirements. The consultation closes on April 27, 2015.

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The Prudential Regulation Authority and Financial Conduct Authority jointly proposed measures seeking to formalize procedures for whistleblowing in the banking and insurance sectors. The proposals aim to encourage employees to blow the whistle when misconduct is suspected without fear of personal repercussions. The proposed new rules include: (i) ensuring that whistleblowing procedures are in place; (ii) encouraging employers to inform employees that they are able to blow the whistle; and (iii) ensuring that whistleblowers are protected from victimization. The consultation closes on May 22, 2015.

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