Does 2015 mark the end of working from the ‘side of your desk’?

Posted: 5th February 2015

Over the past few months, the fall-out from the Parliamentary Commission on Banking Standards (PCBS) has become apparent. The Financial Conduct Authority (FCA) and Prudential Regulation Authority (PRA) have issued consultation papers introducing a new framework; one which is set to enhance accountability within the banking sector.

The final output is now due, with many firms already moving to prepare themselves for the new world.

The key areas of impact have been made clear from a regulatory perspective. However, in the quiet of the Christmas and New Year period, we were able to see another area of significant impact.

Many of you will understand the need to clear those jobs that aren’t core to your role. The same jobs that have landed squarely in your inbox after offering support to colleagues within the wider senior management team. In essence, the kind of roles you perform from ‘from the side of your desk’.

We’re sure you don’t begrudge the effort spent in this vein at all as it tends to be quid pro quo. Many of you will have certainly even thrown enough over the wall to your colleagues in the past. This is the reality of how most firms operate to some degree or another. But, could this be a thing of the past?

The new Senior Managers Regime – through the statement of responsibility and the overarching responsibilities map – is set to remove any shades of grey in terms of role definition. For a role holder in the new world, exacting clarity over ones individual’s responsibility is paramount. It is crucial you hold a clear view of how your area interacts with the wider firm, and be comfortable that the control framework demonstrates that the risk of conduct rule breaches can be effectively controlled.

The personal impact of failure under the new regime is not insignificant. We will see the introduction of a reverse burden of proof whereby individuals are presumed culpable unless they can demonstrate otherwise. The inherent risk involved in the handing-off or accepting of additional responsibility for tasks, projects or even business areas on an interim basis, would surely make taking on such activity a fool’s errand?

There is a risk that through the implementation of mechanisms to deliver regulatory change ahead of the SMR, firms end up adopting an inflexible model of governance and control, simply in order to achieve compliance. Whilst there is no appetite to facilitate the outsourcing of accountability, the regulators understand the reality that even in the new world, there will be a continued need for senior managers to be able to pick up additional responsibilities or provide support and cover to an area outside their remit, often at short notice. In order to protect themselves and the business, senior managers must drive their firms to develop a suitable governance framework. This framework must be sufficiently agile to make the real time adjustments required to ensure that statements of responsibilities and the overarching responsibilities map remains relevant and control framework aligned.

The new regime is a clear sign that accountability is set to become truly personal in 2015.