The Financial Services (Banking Reform) Act 2013 originally introduced sections 66A and 66B of the Financial Services and Markets Act 2000 (FSMA). These sections provided for a ‘reverse burden of proof’ whereby a senior manager was deemed to be guilty of misconduct if there had been a breach of a regulatory requirement in an area for which they were responsible unless they could prove that they had taken reasonable steps to avoid the breach from happening.

On 15 October 2015, HM Treasury published a policy paper, Senior Managers’ and Certification Regime: extension to all FSMA authorised persons. Among the Government’s policy proposals was the introduction of a ‘statutory duty of responsibility’ that would replace the ‘reverse burden of proof’. Under this new proposal the FCA and PRA would only be able to take action against a senior manager if they could show that the individual had failed to take steps that were reasonable for a person in that position to prevent a regulatory breach from occurring. Our blog entry can be found here.

Section 25 of the Bank of England and Financial Services Act 2016 (the 2016 Act) amends sections 66A and 66B FSMA replacing the reverse burden of proof with the statutory duty of responsibility.

There has now been published on the legislation.gov.uk website the Bank of England and Financial Services Act 2016 (Commencement No.1) Regulations 2016. These Regulations bring into force on 10 May 2016 section 25 of the 2016 Act.

View The Bank of England and Financial Services Act 2016 (Commencement No.1) Regulations 2016, 9 May 2016