British regulators have published rules that set out how measures designed to raise the standards of behaviour in the banking business will apply to foreign banks that operate in the U.K.
The U.K. Financial Conduct Authority (FCA) and the U.K. Prudential Regulation Authority (PRA) published near final rules on Thursday detailing how they will apply the new accountability regime that’s being adopted in the British banking business to branches of overseas banks. The new regime aims to ensure that senior managers can be held accountable for any misconduct that occurs on their watch, and it introduces new certification and conduct rules that aim to ensure appropriate standards at all levels in banking.
The rules for foreign banks aim to address the inherent differences between branches of overseas banks and U.K.-based firms, while also minimizing the potential for arbitrage. The regime affects the branches of non-U.K. firms that have permission to accept deposits or to deal in investments as principles in the U.K.
The proposed rules are being published in anticipation of legislation that will extend the statutory elements of the new accountability regime to branches of foreign banks. “By publishing near-final rules ahead of this legislation, we aim to give firms as much time as possible to prepare for the changes,” the FCA says in a statement, noting that the final rules will be published later in the year, as soon as is possible after the legislation is finalized.
“Today’s rules are the latest changes aimed at embedding personal accountability in the culture of financial services and are a crucial step in rebuilding public trust,” says Martin Wheatley, CEO of the FCA.
At the same time, the FCA also set out final rules for individuals working in large insurance firms that fall under the Solvency II regime, which is also “an important part of the overall drive to raise standards of individual conduct across the financial services industry,” the FCA says.