Bosses will pay for scandals under new senior managers' accountability rules

The rules stopped short of proposals for a “guilty until proved innocent” provision

From 2018, bosses at 60,000 financial services firms could face a ban or unlimited fines for failures on their watch

It’s about to get a lot harder for chief executives of financial companies to wriggle out of taking responsibility for corruption and scandal within their company.

Under the "senior managers regime", senior executives across the financial services sector will be held accountable for failures under their watch under new rules.

However the rules stopped short of proposals for a “guilty until proved innocent” provision, after heavy opposition from banks.

Regulators wanted executives to prove that they had taken reasonable steps to prevent rules from being broken. Instead, the regulator has to prove that the chief executive didn’t take those steps, much to the relief of industry bodies such as the accountancy body ICAEW, which said senior managers would be “breathing a huge sigh of relief”.

From 2018, bosses at 60,000 financial services firms could face a ban or unlimited fines for failures on their watch. Their “duty of responsibility” extends to putting in place systems and processes that could stop rules from being broken.

Regulators will also have the right to vet chief executives. Insurance companies, investment companies, asset managers and consumer credit firms will all be covered.

The changes come as regulators seek to assert their authority in light of successive banking scandals. In August, Tom Hayes became the first man to be convicted of rigging the Libor rate that banks used to charge interest when lending to each other. His bosses at UBS, where he was working at the time, have not been charged.