SIFs under pressure to meet unclear expectations

For years the Financial Services Authority was castigated for its seeming inability to bring enforcement actions against senior members of key firms. But cases in which it has lately made aggressive attempts to answer its critics have highlighted that regulatory expectations of Significant Influence Functions are somewhat skimpily outlined in the Handbook. Nathan Willmott warned a recent conference that many SIFs do not grasp the proactive rather than reactive nature of their responsibilities, as currently viewed by Canary Wharf.

By Esther Martin, editor

After the financial crisis of 2007-2008 caught both the regulator and many of the regulated napping, investigations by the FSA highlighted that corporate governance standards at the firms which ran into trouble - such as Northern Rock, Bradford & Bingley, RBS, Bank of Scotland and Dunfermline Building Society, among others - were very low. "The FSA made some comments publicly and it made some even more stringent comments privately about how shocked it was at the quality of some decision-making at board level," Nathan Willmott, a partner with Berwin Leighton Paisner, told the LexisNexis Financial Services Investigations and Enforcement conference. It said that "specific decisions and strategies can be seen to be at the root of those firms' demise" and also that "there are some management decisions that have revealed a degree of incompetence and at times a rather cavalier approach regarding risk management".