UK Regulators to Free 140,000 Managers From Conduct Checks

By Daniel Okafor

The UK's two top financial regulators plan to free 140,000 managers from enhanced conduct checks, dismantling a core piece of the post-2008 accountability regime that governs the City of London. The Bank of England and the Financial Conduct Authority (FCA) put the proposals forward on Thursday, at a dinner for City executives hosted at the Mansion House in central London.

The regulators estimate the changes will save businesses about £2bn over 10 years. They would also cut the Bank of England's costs by £11.5m a year and the FCA's by £229m a year.

What exactly is being loosened?

The plans target the senior managers regime, introduced in the mid-2010s after widespread public anger over the 2008 banking crash. The regime was built to fix a specific failure: almost no bank boss was held to account for the actions that produced the crisis.

It originally covered banks. It was later expanded to all financial services companies, including asset managers and hedge funds.

Under the new proposals, only the most senior executives — chief executives and chief financial officers among them — would have to prove they are "fit and proper" each year, and before taking new jobs.

That change removes roughly 140,000 staff from the obligation to show they operate with "integrity" and follow regulators' conduct rules.

The reporting burden also shrinks. Firms would no longer report first warnings or what the regulators call "lower-level misconduct of limited relevance" — staff showing up late or dropping calls. Instead, the regulators want to hear only about "serious misconduct" and cases where staff receive final warnings or are fired.

One guardrail stays. Any initial cases of misconduct would still have to be flagged to top brass, including the chief executive and chief financial officer.

Why are regulators doing this now?

The mechanism is political, not technical. The government handed regulators a new statutory objective: ensuring UK firms are competitive on the world stage. These proposals are the latest City rules to be scaled back under that mandate.

The most prominent precedent is the cap on banker bonuses. That cap, which limited bonuses to two times a banker's salary, has already been lifted.

The timing of the announcement carries its own signal. The regulators unveiled the plans while hosting City executives at Mansion House — the traditional venue for government-to-finance courtship in London.

Will bosses escape accountability?

The Bank of England and the FCA say no. They argue the changes remove "unnecessary burdens" without weakening enforcement.

They said in a joint statement that 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".

The quote is doing heavy lifting. The senior managers regime exists precisely because, before 2008, formal accountability rules on paper did not stop misconduct in practice. Whether annual "fit and proper" checks confined to a handful of named executives can carry the same deterrent weight is the open question the regulators have now invited.

What does it mean for the City?

For firms, the arithmetic is straightforward. Fewer certification requirements, fewer reports to file, and a compliance perimeter that covers thousands fewer people. The £2bn decade-long saving is the regulators' own figure.

For individual managers at asset managers, hedge funds and banks, the practical change is large: no annual proof of integrity, no conduct-rules paper trail tied to their personal authorisation.

For the accountability project launched after 2008, the direction is now unmistakable. The bonus cap went first; the conduct regime follows; and the government's competitiveness mandate gives regulators a standing reason to keep trimming.