(Oct 23): UK regulators plan to spare 139,000 bank executives from yearly checks under the senior managers and certification regime in an effort to spur growth and save firms almost £2 billion (US$2.7 billion or RM10.9 billion) over a decade.

Staffers below senior manager level will no longer be subject to annual certification or appear on the financial services register, the Financial Conduct Authority and the Prudential Regulation Authority (PRA) said in proposals published on Thursday.

The reforms — the first big changes proposed under new PRA head Katharine Braddick — would also end the requirement for regulators to pre-approve chief actuaries and chairs of risk and audit committees, instead asking firms to notify regulators of these appointments. 

Senior staff including chief executive officers, chief financial officers and chairs will still require regulatory pre-approval, including fit and proper tests. The wider conduct rules, which cover about 900,000 people, are not changing, though the regulators plan to simplify training and breach reporting.

“These proposals keep checks in place for the most important roles, meaning individuals are accountable for their actions, but reduce the administrative burden where it isn’t needed, giving firms more time to invest in growth-focused activities and greater flexibility in onboarding senior talent,” said Braddick, who was an executive at Barclays plc until earlier this year.

In total, companies will need to spend 53% less on complying with the regime, according to estimates in the consultation paper. The rules were introduced in the aftermath of the 2008 financial crisis to ensure executives at financial-services firms can be held to account for misconduct that occurs on their watch. 

Lawmakers have been looking to narrow the scope of the rules for several years, with Conservative ministers announcing a review as part of the post-Brexit overhaul known as the Edinburgh reforms in 2022. 

Regulators signalled last year that they would be streamlining the rules, as part of efforts by Keir Starmer’s Labour government to reduce regulation and spur much-needed economic growth. A consultation on the latest plans will now run until Jan 22.

“Firms will remain responsible for ensuring their employees remain competent, suitable and meet appropriate standards of conduct, and those no longer requiring pre-approval will continue to be held to the same level of accountability as before,” the regulators said in a joint statement.

In a speech at London’s Mansion House, Braddick also said the PRA will create a new directorate to focus on firms’ operational and cyber resilience. The strength of companies’ technology systems is under increasing scrutiny after a spate of cyber attacks spanning from crypto wallets to fridges.

Uploaded by Tham Yek Lee