This guide to senior management accountability will consider the steps being taken by national regulators across the globe to improve organisational culture and governance through enhancing the accountability of senior management. We look at the common key features of the various national regimes and highlight some of the difficulties encountered by firms in seeking to respond to and implement these changes. Finally, we will assess whether increased senior management accountability is likely to be an effective medium for delivering the widespread changes to organisational culture required to restore trust and confidence in the financial services sector.

Background

In the aftermath of the 2008 financial crisis, the role played by senior managers in driving desirable conduct outcomes in firms has been at the forefront of the international regulatory agenda. Whilst initial focus fell upon rebuilding the balance sheets and financial resilience of shattered institutions, there was a shared recognition that good governance and culture would play an equally important role in any recovery.

Individuals, especially senior individuals, play a crucial role in fostering good governance. Organisational culture is, ultimately, an outworking of the values and influence of those who lead an organisation. It is reflected in every decision at every level, from future strategic direction to who in a front-line team gets promoted ahead of their, possibly equally capable, colleagues. It is much more than simply the ‘tone from the top’ and yet, it cannot change without significant leadership and action from senior staff.

The financial crisis exposed the difficulties that firms managed largely along functional lines faced in articulating who was responsible for specific business areas within a legal entity model of governance that is still largely prevalent. Leadership was exposed as considerably less effective than required. This has resulted in many national regulators reforming their frameworks for regulating the key individuals and strengthening accountability within local firms.

The full report

Explore the approaches taken by national regulators using the map below, or if you are a Linklaters client, log in or subscribe to our Client Knowledge Portal to access the full guide.