FCA moves to improve personal responsibility

Business ethicThe UK financial regulator is “determined to embed a culture of personal responsibility within the banking sector”, it said today as final rules for improving individual accountability by high-frequency traders and other actors were published.

The Financial Conduct Authority (FCA) rules affect financial services workers carrying out wholesale activities, such as algorithmic and high-frequency trading, in banks, building societies, and at investment firms regulated by the Prudential Regulation Authority (PRA).

Fundamentally, the rules will make it easier for firms and regulators to be clear about who is responsible for what, says the FCA, and there is a particular emphasis on risk takers and staff who pose a risk to a firm or its customers.

The new measures mean that the certification regime – which applies to “material risk takers” such as those giving investment advice or administering benchmarks – will be extended to people performing two new functions: the “client-dealing” function and the “algorithmic trading” function.

Firms will have until March 7 to identify people caught by the rules, and the rules must be applied by September 7, 2016.

Tracey McDermott, acting chief executive at the FCA, said clear individual accountability should focus minds, drive up standards, and make firms easier to run and to supervise.

“And if things go wrong, it will allow senior managers to be held to account for misconduct that falls within their area of responsibility.”

The package of reforms also includes proposals for regulatory references for candidates applying for senior manager and “significant harm” functions under the certification regime in banks, building societies, credit unions, PRA-designated investment firms and insurers.

Responses to consultation on this matter raised a number of complex issues, the FCA says, which require further deliberation before final rules are made.

As an interim measure, the FCA has continued the current referencing requirements under the approved persons regime for pre-approved roles.

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