Financial Regulation International
The Senior Managers and Certification Regime in the UK: The Whistleblowing Reforms
The aim of this article is to critically assess the effectiveness of the recently introduced Senior Managers and Certification Regime (SMRC). Part One will assess some of the future challenges in the implementation of the regime to support the argument that the regulatory reforms are not a sufficient mechanism to expose individuals and hold them accountable. The author will critique the effectiveness of the provisions on the allocation of responsibilities and collective decision-making and propose that the case law on the duties of directors under corporate law should be used as guidance for the implementation of the new regime. This part will also argue that although the new statutory “duty of responsibility” might not be as effective as it was intended to, it is definitely a better option than the previously proposed “presumption of responsibility”. Part Two will argue that the presence of an unethical banking culture and various conflicts of interest incentivise individuals to circumvent the regime and undermine the effectiveness of the new Code of Conduct. Lastly, the author will analyse the new rules on whistleblowing and argue that their ability to enhance the effectiveness of the regime by exposing inappropriate conduct can also be undermined. A banking culture of fear renders any internal whistleblowing arrangement nothing more than window dressing while the appointment of a Senior Manager as the whistleblowers’ champion is not ideal considering the conflicts of interest with executive directors.