In his speech at Mansion House on the 22 October 2015, Andrew Bailey highlighted three topical issues including the Senior Managers Regime and the impact of the change of 'Presumption of Responsibility' to 'Duty of Responsibility'. He said:
The change that the Government has announced to create "the duty of responsibility" will, if Parliament approves it, replace the presumption with a statutory duty on senior managers to take reasonable steps to prevent breaches of regulatory requirements by their firms from occurring. Thus it will be for the Regulator to show that the senior manager did not take such steps as it was reasonable for a person in that position to take to prevent the breach of regulatory requirements.
In my view this does not represent a watering down of the requirement. Why? Well the "duty of responsibility" creates a positive duty on senior managers to take reasonable steps to prevent regulatory breaches occurring. This will be on a statutory footing, which hardwires the concept in the very fabric of the regulatory regime, rightly reflecting the importance which society places on this issue.
Let me be very clear, substituting "duty" for "presumption" changes the mechanism of enforcement not the substance of the requirement on senior managers, and I would not support changing the latter.
A full transcript of the speech can be found here.
Andrew Bailey is the Deputy Governor for Prudential Regulation and the Chief Executive Officer of the Prudential Regulation Authority.