UK regulators propose easing post-crisis accountability rules for City bosses

Bank of England and FCA plan would free 140,000 staff from annual fitness checks

By LineZotpaper

Published22 October 2026

Read Time2 min

Sources2 outlets

The Bank of England and the Financial Conduct Authority (FCA) have proposed significant relaxations to the senior managers regime introduced after the 2008 financial crisis. The changes would mean only the most senior executives, such as chief executives and chief financial officers, must prove they are fit and proper each year, freeing about 140,000 other staff from enhanced checks. The regulators say the reforms will save businesses £2bn over a decade while maintaining high standards of individual accountability.

The proposals were announced at a dinner for City executives at the Mansion House in London. They are the latest in a series of deregulatory moves since the government instructed regulators to prioritise the competitiveness of UK firms. Earlier this year, the cap on banker bonuses was lifted.

Under current rules, firms must report all instances of misconduct by staff, including low-level issues such as lateness. The new plan would scrap the need to report first warnings or lower-level misconduct of limited relevance, focusing instead on serious misconduct and final warnings. Initial cases must still be flagged for senior executives.

The senior managers regime was first introduced for banks in the mid-2010s after public anger that few banking executives faced consequences for the 2008 crash. It was later extended to asset managers, hedge funds and other financial services firms.

In a joint statement, the Bank of England and the FCA said: "The high standards of individual accountability and conduct will remain unchanged, including the regulators' commitment to ensuring that individuals are accountable for misconduct that affects society as well as their employers." They estimate the reduced reporting burden will save businesses about £2bn over 10 years, while cutting the Bank of England's costs by £11.5m and the FCA's costs by £229m annually.

Analysis

Why This Matters

The City of London is a global financial hub; changes to its regulatory framework may influence other jurisdictions.
Reducing oversight of lower-level staff could lower compliance costs but also reduce early detection of misconduct.
The move represents a broader shift towards competitiveness over post-crisis accountability measures.

Background

The Senior Managers and Certification Regime (SMCR) was introduced in the mid-2010s following the 2008 financial crisis, after few senior bankers were held responsible for the collapse. It required financial firms to ensure all staff are fit and proper and to report all instances of misconduct. The current proposals by the Bank of England and the FCA would dramatically narrow this regime, covering only the most senior roles.

Key Perspectives

[Bank of England and FCA]: The regulators argue the proposals remove "unnecessary burdens" on businesses, saving £2bn over ten years, while maintaining high standards of individual accountability. They insist that senior executives will still be held to account for serious misconduct. [UK Government and City industry]: The changes align with the government's new objective for regulators to support competitiveness. The financial industry is likely to benefit from reduced compliance costs and a more flexible regime, following the earlier lifting of the bonus cap.

What to Watch

The consultation process and response from industry groups and consumer advocates.
Potential parliamentary scrutiny or political objections as a rollback of protections.
Whether other financial centres follow the UK's approach to deregulating executive accountability.
The number of misconduct reports and the regulators' ability to spot emerging risks.

Sources

UK to relax post-2008 rules that hold City bosses accountable for wrongdoing · World news | The Guardian
UK to relax post-2008 rules that hold City bosses accountable for wrongdoing · Business | The Guardian

Checked

12 claims in this story checked against 1 source: 7 supported.

Show each claim

SupportedUK regulators propose easing post-crisis accountability rules for City bosses.World news | The Guardian: “The UK is watering down rules introduced in the aftermath of the financial crisis that were designed to hold City bosses accountable for wrongdoing. The plans, put forward by the financial industry’s two top regulators, the Bank of England and the Financial Conduct Authority (FCA)”
Partly supportedThe plan would free about 140,000 staff from annual fitness checks.World news | The Guardian: “would also free 140,000 managers from extra checks. ... require only the most senior executives – such as chief executives and chief financial officers – to be forced to prove they are “fit and proper” each year”
Partly supportedThe regulators say the reforms will save businesses £2bn over a decade.World news | The Guardian: “The regulators said removing these “unnecessary burdens” would save businesses about £2bn over 10 years”
SupportedThe regulators say high standards of individual accountability and conduct will remain unchanged.World news | The Guardian: “the “high standards of individual accountability and conduct will remain unchanged, including the regulators’ commitment to ensuring that individuals are accountable for misconduct that affects society as well as their employers””
SupportedThe proposed changes were announced at a dinner for City executives at the Mansion House in London.World news | The Guardian: “The proposals were announced as regulators hosted a dinner for City executives at the Mansion House in central London.”
SupportedThe changes would cut the Bank of England’s costs by £11.5m and the FCA’s by £229m annually.World news | The Guardian: “while cutting the Bank of England’s and FCA’s costs by £11.5m and £229m each year, respectively.”
Partly supportedEarlier this year, the cap on banker bonuses was lifted.World news | The Guardian: “Those efforts have already helped lift the cap on banker bonuses, which were previously limited to two times a banker’s salary.”
Partly supportedUnder current rules, firms must report all instances of staff misconduct, including low-level issues such as lateness.World news | The Guardian: “The new changes will also lead to the loosening of rules around how often firms report bad behaviour by lower level staff. It means they will no longer have to report first warnings or “lower-level misconduct of limited relevance” ... such as if staff are showing up late or dropping calls.”
SupportedThe plan would stop firms reporting first warnings or lower-level misconduct of limited relevance, focusing instead on serious misconduct and final warnings or dismissals.World news | The Guardian: “they will no longer have to report first warnings or “lower-level misconduct of limited relevance” ... Instead, they only want to hear about “serious misconduct” and cases where staff are given final warnings or fired.”
SupportedInitial misconduct cases must still be flagged for senior executives.World news | The Guardian: “Any initial cases of misconduct will still have to be flagged for top brass, including chief executive and chief financial officers.”
Partly supportedThe regime was introduced in the mid-2010s after public anger that few banking executives faced consequences for the 2008 crash.World news | The Guardian: “It would be a watering down of measures that came into force in the mid-2010s, in response to widespread public anger over the 2008 banking crash. ... few bank bosses were held to account for actions that contributed to the ensuing financial crisis.”
SupportedThe regime was later extended to asset managers, hedge funds and other financial services firms.World news | The Guardian: “While the regime originally covered banks, it was later expanded to cover all financial services companies including asset managers and hedge funds.”