Why the banking crisis emphasises the need for financial accountability
Credit Suisse and Silicon Valley Bank. While these recent crashes may be spreading fear about the fragility of the banking system, it’s also a reminder of the importance of the recent push for greater accountability.
These collapses have very different contexts and, although they shouldn’t be viewed through the same lens, they, alongside SM&CR, are prompting financial services to think about their risk management approach. Going forwards, creating transparency over accountabilities and responsibilities across every facet of a regulated entity is essential.
Some organisations have considered the SM&CR regime “too onerous” – with consequences for neglecting reasonable steps ranging from fines to imprisonment – and some have asked for accountability rules to be made more lenient. On the other hand, there is also feedback from important stakeholders who feel that its deployment has had its intended outcome by fundamentally changing how firms and senior individuals operate for the better.
One of those stakeholders is Andrew Bailey, Governor of the Bank of England, who in response to the financial reforms stated that it was “important to make clear, that the basis on which the regulatory [regime] was done was not done just to address a particular problem that then went away”. He added: “It was done to put down some pretty fundamental planks of the regulatory system.”
This statement is even more relevant now. A clear and well-managed responsibilities map avoids a culture of blame and helps establish greater control over governance. Plus, with the rate of change occurring in the regulatory market, these issues must be evaluated frequently. A systemised approach can support this.
For these reasons, it would be surprising if the government decided to use the Edinburgh reforms to reduce their focus on accountability, especially in regard to senior managers. But what may be beneficial is a reduction in complexity and bureaucracy. Simplifying (or digitising) the processes surrounding significant harm functions and certification would allow organisations to focus on performing their duties well, rather than getting burdened with manual tasks. Especially for those with many certified people or multiple entities to manage.
Regardless of the outcomes of this reform, knowing who is responsible for which actions at any point in time is key. Not only does it empower greater accountability, but it also strengthens clear decision-making. And in today’s increasingly dynamic environment, a digital system will enable organisations to continually evaluate people’s positions, manage risk and uphold this culture of transparency.
The Trailight platform enables organisations to maintain their accountabilities on a real-time basis, minimising the manual effort and creating clear tasks and requirements for your individuals.
Discover more about Trailight in our Individual Regulatory Compliance capabilities here.