The plans are part of the Approved Persons' Regime as it relates to senior executives of banks and insurance companies based outside the European Economic Area. The Prudential Regulation Authority (PRA) had been considering introducing jail sentences among its list of possible sanctions - but has stepped back from that option.

Reasonable steps

Instead, however, there will be fines, public censures and bans. In a rather complicated arrangement, the PRA is working alongside the Financial Conduct Authority (FCA) on the Regime. The FCA is proposing to increase the 'presumption of responsibility' standard in the rules. This would mean that a senior manager would be presumed to have responsibility for breaches in rules unless he or she could prove that they had taken reasonable steps to avoid a breach. 

Serious money

Simon Morris, a CMS financial services partner, said: 'The FCA’s draft rules on taking action against individuals make it clearer than ever that the reversed burden of proof will put senior managers at banks under real pressure. It is unlikely you can satisfy the regulator that you took all reasonable steps when it has investigated and already decided that you didn’t, so you’ll probably need to go to the Tribunal to argue your case. And that will take serious time and money.' Source: Financial Times