New rules to hold bosses responsible for wrongdoing at British banks has led to anxiety among top professionals and deterring some people from taking on senior management roles, Reuters reported.
Citing legal and compliance experts, the report said the new regulations are even prompting some big shots to play down their own importance.
Public anger following the financial crisis and scandals such as currency-market rigging have led to new rules that make it easier to hold top bosses to account for wrong-doing in their institutions.
The Senior Managers Regime (SMR), which will come into effect from March 7, marks a step change in banking rules as it will allow regulators to pin blame on named people rather than just firms.
“I have had some clients with staff resistant to being a senior manager, worried they are going to be kept awake at night about what their team is doing, and if something goes wrong, will they be the scapegoat,” Sarah Henchoz, a partner at law firm Allen & Overy, told Reuters.
Unlike the old system, bankers deemed to wield significant managerial influence will have to sign up to a legal duty of responsibility for their units, and show they took reasonable steps to prevent or stop rule-breaking that comes to light.
They include CEOs, heads of big business units, and non-executive directors who chair key committees and will amount to about 10,000 staff across 900 banking companies, the report said.
Ron Gould, a former UK regulator who is now European Chairman of Compliance Science, was quoted as saying that some senior bankers were looking at whether they could convince regulators that they did not have significant managerial influence over their teams.
“One thing I have seen that does make me smile is the wonderful term used by some firms that want to ‘juniorise’ positions,” Gould said. “It may be more wishful thinking than anything else.”
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