The unprecedented events of the global financial crisis have caused much hand wringing among regulators and policy makers both in the UK and abroad. The causes of the crisis were complex with no one factor taking precedence over others. In spite of this, a view that has obtained widespread agreement is that the behavoiur of individuals within financial services firms was at least partly to blame.
The inability of regulators to take effective enforcement action against some of the main characters involved in firm failures at the time of the crisis was one of the catalysts that led to the establishment of the Parliamentary Commission on Banking Standards (PCBS), which published its recommendations in June last year. It delivered excoriating criticism of the Approved Persons Regime, recommended it be scrapped in relation to bankers, and replaced with a stricter set of requirements, supported by new conduct rules. The Report, ‘Changing Banking for Good' labeled the existing regime "a complex and confused mess”.
Some of the recommendations have now taken legislative form in the Financial Services (Banking Reform) Act 2013, which received Royal Assent in December last year. Part 4 of the Act is entitled 'Conduct of Persons working in financial services sector'. It will not come into force until the Financial Conduct Authority and the Prudential Regulation Authority have consulted upon and created new rules and procedures governing how the law will operate in practice. These consultations will occur over the course of this year. However, there is much solicitors can do now to help their financial services clients to prepare for the changes, which are extensive, and may impact upon a high percentage of the 400,000 staff currently employed by Banks in the UK.