The senior managers will have been committing an offence if:
he or she agrees to the taking of a decision which causes the institution to fail;
at the time of the decision, she or he was aware of the risk that the decision could cause the institution to fail;
his or her conduct in relation to the decision fell far below what could reasonably be expected of a senior manager in that position.
Commenting on the new law, the Chancellor, George Osborne, said
'The new criminal offence, which became law on 7 March, is the latest milestone in my plan to ensure that the British banking industry operates to the highest possible standard. It is absolutely right that a senior manager whose actions causes their bank to fail should face jail.'
A new Senior Managers and Certification Regime (SM&CR) also came into force and replaces the existing Approved Persons Regime for deposit takers and investment banks. The SM&CR will focus on the key people in banks including those below senior management level to ensure they are suitable for their posts.
The new SM&CR implements the recommendations of the Parliamentary Commission on Banking Standards in relation to individual conduct and standards in banking.
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