FCA speaks on corporate misconduct and individual accountability

Mark Steward, FCA Director of Enforcement and Market Oversight, has spoken on tackling conduct issues and individual and corporate accountability. He gave examples of where parties to investigations had strongly felt a fault within an institution had either been wrongly blamed on an individual when it was an institutional failing, or where an institution felt the culpable individuals were wholly to blame.  He said this illustrates how investigators have to assess the conduct of all participants and avoid a piece-meal approach. He pointed out how the SMR has been designed to clearly identify and allocate the responsibilities of senior managers and align them to duties owed by the firm. He noted, though, that:

  • the duty of responsibility does not create a separate and independent basis for senior management liability;
  • a senior manager is not liable just because a firm has breached a requirement;
  • there are arguments both that failure of a manager to take reasonable steps must have caused a firm to be in breach and, conversely, that it could be a factor in the corporate breach; and
  • the SMR works to improve not only firm behaviour but also the perceptions of senior management of their obligations and the consequences of not meeting them.

He stressed the SMR does not mean there will be an end to action against firms, and moved on to look at the various ways of holding firms to account.