The Institute of Directors has welcomed the removal of the ‘reverse burden of proof’ requirement from the FCA’s proposed Senior Managers Regime and called on lawmakers to follow this up by taking non-executive directors out of the rules.
Oliver Parry, Senior Corporate Governance Adviser at the Institute of Directors, said:
“It is right to drop the ridiculous ‘reverse burden of proof’ requirements from the Senior Managers Regime. Scandals across the banking industry such as Libor, foreign exchange rate-rigging and PPI misselling have given bankers a toxic name and we support the regulators as they seek to address what went wrong before, during and after the financial crash. This rule, however, which was both unworkable and excessive, was a step too far. It is encouraging to see policymakers heed the advice of the IoD, and others, who raised concerns when the rules were first proposed.
“We continue to support the plans to hold senior executives and decision-makers to account. The people who run financial institutions have vast amounts of power in their hands, and the decisions they take must be properly scrutinised. With a host of tough new regulations in place, and an industry which is now acutely aware of the need to rebuild its reputation, the focus should be on overhauling the culture of banking in the UK. This is something no amount of regulation can achieve.
“The fact that non-executive directors are still wrapped up in the scope of the Senior Managers Regime remains a major concern. Non-executive directors do not have the same responsibilities or decision-making powers as executives who run the businesses on a day-to-day basis. Including non-executive directors within the Senior Managers Regime is too much, and we would urge the regulators to reconsider.”
The Institute of Directors will be hosting an event with ICSA on Monday 19th October at 6pm which looks at the issue of corporate culture, regulation and the role of culture in the financial crisis with Baroness Neville-Rolfe, parliamentary under-secretary at the Department for Business, Innovation and Skills.