On 4 May 2016, Parliament passed the Bank of England and Financial Services Act 2016, which introduced the ‘duty of responsibility’. The duty of responsibility came into force on 10 May 2016.

Under the duty of responsibility, the FCA and the PRA can take action against Senior Managers if they are responsible for the management of any activities in their firm in relation to which their firm contravenes a regulatory requirement, and they do not take such steps as a person in their position could reasonably be expected to take to avoid the contravention occurring (or continuing). The duty is to apply across the financial services industry when the Senior Managers’ Regime is extended.

The duty of responsibility requires the regulators to prove a contravention of a regulatory requirement by the firm, and that the Senior Manager was responsible for the management of any activities in their firm in relation to which the firm’s contravention occurred. The burden of proof lies with the regulators to show that the Senior Manager did not take such steps as a person in their position could reasonably be expected to take to avoid the firm’s contravention occurring.

The duty of responsibility is supported by Conduct Rules that set out basic standards of good conduct for staff. The FCA may take disciplinary action against individuals whose conduct falls short of these standards.

In September 2016, the FCA published Consultation Paper 16/26: Guidance on the duty of responsibility: amendments to the Decision Procedure and Penalties Manual (CP16/26). In CP16/26 the FCA set out proposed amendments to the Decision Procedure and Penalties Manual (DEPP) that will give guidance on how the regulator will enforce the ‘duty of responsibility’.

The FCA has now published Policy Statement 17/9: Guidance on the duty of responsibility: final amendments (including feedback on CP16/26) to the Decision Procedure and Penalties Manual (PS17/9). The FCA reports in PS17/9 that it has made no substantive amendments to DEPP in light of the responses to CP16/26. The amendments that have been made to DEPP apply from 3 May 2017. The FCA also provides feedback to the comments received to CP16/26.

View Guidance on the duty of responsibility: PS17/9, 3 May 2017