Held to account – The competitive impact of enhanced senior management responsibilities in global financial services

1 November 2017

Ever since Nick Leeson brought down Barings Bank in 1995, regulators in the UK have been struggling to put in place an appropriate regime for holding senior managers to account. The UK’s first attempt, the Approved Persons Regime, which lasted ten years, was found wanting in the light of the financial crisis. Warren Buffett once said: “Only when the tide goes out do you discover who has been swimming naked”. The financial crisis exposed some shocking behaviour, from reckless decision making to outright illegality. The reputation of financial services nosedived as case after case of systemic failings was uncovered, all arguably caused by a lack of accountability of those at the top. The UK regulator’s response has been the Senior Managers and Certification Regime, which has been heralded as a gold standard. Only time will tell whether it can deliver what it aims to achieve.

Fast forward a decade from the start of the financial crisis, and a shift in regulatory focus from the institution to the individual is apparent. Scrutiny on the responsibilities and accountability of senior management within financial services is increasing across the globe, with particular parallels between what is happening in the UK and Asia. 89% of senior managers and compliance officers we spoke to worldwide for this report agreed that scrutiny has increased since the financial crisis. Encouragingly though, we’ve also found that the new rules are largely accepted, rather than challenged, driven by a belief that senior management accountability is good for business. In particular, there is a feeling that the increased scrutiny has improved governance and attitudes towards setting culture.

This report looks at the approach being taken by regulators across the world’s four leading financial jurisdictions – the UK, US, Hong Kong and Singapore. It examines the similarities and differences between the regimes, the reactions of those subject to the regimes, and highlights a number of potential unintended consequences of the increased emphasis on senior management.

Download the full report:

 Held to account – The competitive impact of enhanced senior management responsibilities in global financial services

 Held to account – The competitive impact of enhanced senior management responsibilities in global financial services – US version only

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