Why a New Regime and the Regulators' Approach

Why do we have a new regime? Well, it's 10 years since Northern Rock in fact, so time goes quickly and the regulator was very keen to ensure that trust is rebuilt. It's still taking place, I think, would be the view, but this is all about the regulator's approach to culture and governance and looking to actually increase personal accountability. This was one of the problems around the crisis in the first place. It's going to be a continuum. It won't be just a tick box. The regulator is keen to see standards improving across the industry and improving on an upward scale, so it is going to mean that expectations will gradually increase as well.

We've had the existing regime since March 2016, so we're going to be seeing the new regime implemented at some point during next year. If we can have the next slide please. One of the challenges that the regime brings is the potential push and pull between individual accountability and collective responsibility, but the regulator is very clear that they work in harmony. Importantly the use of the Murder on the Orient Express analogy there is to ensure that such a defense cannot be used in the future, i.e., everyone blaming each other. What is clear though, and we have seen this already is the level of expectation that's been brought on the chairman and non-executive directors as a key driver for improving and developing a firm's culture and standards.

Next slide please. This slide's a bit busy, but it just gives you a timeline of the journey that we've been on and demonstrating just how long these things do take. The first consultations coming out at the end, originally, of 2014 with updated 2015 regime, as I say, started 2016. We did have transitionals with the regime first time around in order to certify individuals, a yearlong transition, and a year to implement the conduct rules to all staff. Looking forward we've still got a further consultation to come. We have the CP17/25 that came out in July. We're expecting another one in November 2017. The first one being the what and the why, the second one's really the how, how practically are you going to complete forms, et cetera.

We're still also waiting to get clarification around the legal sanction and whether or not that will be core. As I've said, late 2018 is when the regime is due to come into force for the remaining 50 odd thousand firms that are not subject to the regime at the moment.

This webinar was co-hosted with Eversheds-Sutherland www.eversheds-sutherland.com