Sutton business advisers and accountants Harmer Slater has announced a new law which came into force last week that could see senior managers in UK banks, building societies or systemically important (PRA-regulated) investment firms face up to seven years in jail or an unlimited fine if their actions cause their institution to fail.
The senior managers will have been committing an offence if:
he or she agrees to the taking of a decision which causes the institution to fail;
at the time of the decision, she or he was aware of the risk that the decision could cause the institution to fail;
his or her conduct in relation to the decision fell far below what could reasonably be expected of a senior manager in that position.
Commenting on the new law, the Chancellor, George Osborne, said
‘The new criminal offence, which became law on 7 March, is the latest milestone in my plan to ensure that the British banking industry operates to the highest possible standard. It is absolutely right that a senior manager whose actions causes their bank to fail should face jail.’
A new Senior Managers and Certification Regime (SM&CR) also came into force and replaces the existing Approved Persons Regime for deposit takers and investment banks. The SM&CR will focus on the key people in banks including those below senior management level to ensure they are suitable for their posts.
The new SM&CR implements the recommendations of the Parliamentary Commission on Banking Standards in relation to individual conduct and standards in banking.
Harmer Slater are an independent firm of chartered accountants and business advisers located in Sutton, close to central London with experience in dealing with listed and unlisted businesses operating across a range of industries in the UK and overseas. For full details go to HARMER