The PRA and FCA have published a joint consultation paper that follows up on the proposals set out in Consultation Paper 14/14: Strengthening accountability in banking: a new regulatory framework for individuals (CP14/14).
The consultation paper sets out the PRA’s and FCA’s proposed transitional arrangements for relevant firms and individuals, the application and notification forms necessary for implementing the new senior managers and certification regimes, and consequential changes to the PRA Rulebook/Handbook and FCA Handbook.
Notable points in the consultation paper include:
- the timing of the introduction of the new accountability regime will be announced by HM Treasury shortly;
- the proposals that the PRA and FCA are consulting on do not apply to UK branches of relevant firms that are headquartered overseas. HM Treasury is currently consulting on draft legislation to bring such firms within the scope of the new accountability regime. The PRA and FCA will consult on the application of the regime to these branches (including transitional arrangements, forms and consequential changes) in due course;
- the PRA and FCA indicated in CP14/14 that they expect any individual currently approved to perform a significant influence function in a relevant firm, who will be performing a corresponding senior management role under the new regime, to be eligible to be ‘grandfathered’ into that new role. This remains the intention of HM Treasury and the regulators;
- at the point of transition to the new accountability regime, relevant firms will not be required to obtain references or criminal records checks for individuals who are being grandfathered into senior management functions. However, the requirement to obtain regulatory references and criminal records checks will apply for grandfathered persons if they subsequently apply to perform a different senior management function; and
- the proposed approach to in-flight applications is that they will be treated as if they had been made for the equivalent senior management functions under the new regime. This approach will mean that firms will be required to update the application to make clear which senior management function will be performed. The PRA and FCA propose that the updated application will need to be accompanied by a Statement of Responsibilities and a Management Responsibilities Map.
The deadline for comments on the consultation paper is 27 February 2015.