The financial institutions’ governance and risk management shortcomings were not the only causes of the 2008 financial crisis, however, they emphasised the need to redefine financial services industry’s standards.
The Parliamentary Commission on Banking Standards introduced a number of recommendations designed to promote cultural reform as a result. These included increased personal accountability and penalties for actions or behaviour considered inappropriate or inconsistent with the standards. These recommendations later enacted in the Banking Reform Act 2013, created the legislative framework for the PRA and FCA to develop what is known collectively as the Senior Managers Regime, applicable for banks, building societies and credit unions.
The new regime introduces a wide array of challenges that need to be addressed and overcome if organisations are to successfully comply with the requirements.
Our Strengthening Accountability in Banking publication outlines the implications of the new regime and what organisations need to do to address it.