The Rise of Individual Accountability Regimes
Following the 2008 financial crisis, regulators worldwide have sought to ensure that senior executives bear personal responsibility for corporate misconduct (Arora, 2021). The widespread failures exposed in the crisis, including reckless risk-taking and mismanagement, led to calls for stricter accountability measures. The UK’s Senior Managers and Certification Regime (SMCR), Ireland’s Individual Accountability Framework (IAF), and Australia’s Financial Accountability Regime (FAR) are among the key frameworks designed to hold executives accountable (Financial Stability Board, 2023). These initiatives emphasize clear delineation of responsibilities and impose penalties for failures, ensuring that accountability cannot be easily evaded.
The UK’s Senior Managers and Certification Regime (SMCR)
The SMCR, introduced in 2016, was designed to improve accountability in financial services by making senior managers explicitly responsible for their areas of oversight (FCA, 2023). A key driver behind its introduction was the LIBOR scandal, where banks manipulated benchmark interest rates, yet many senior executives avoided personal repercussions (Ferran, 2022). The regime requires firms to assign responsibility to named individuals and mandates that senior managers demonstrate they have taken “reasonable steps” to prevent misconduct (Bank of England, 2022).
Enforcement actions under the SMCR have demonstrated its impact. In 2018, Barclays CEO Jes Staley was fined £642,000 for attempting to unmask a whistleblower (FCA, 2018). More recently, the UK Prudential Regulation Authority fined TSB’s former Chief Information Officer £81,000 for failing to manage an IT outsourcing transition that led to service disruptions (PRA, 2022). These cases send a clear signal: senior executives must ensure governance failures do not occur under their watch.
Ireland’s Individual Accountability Framework (IAF)
Inspired by the SMCR, Ireland enacted the IAF in 2023 to establish direct accountability for senior executives (Central Bank of Ireland, 2023). The framework includes the Senior Executive Accountability Regime (SEAR), which obligates firms to outline individual responsibilities and holds executives personally liable for failures in governance (Moloney, 2023). A major driver behind this legislation was the tracker mortgage scandal, in which Irish banks overcharged customers for years, leading to collective fines exceeding €200 million—yet no individual executives faced penalties (Donnelly, 2022).
Unlike the previous legal framework, which required regulators to prove a firm’s misconduct before taking action against individuals, the IAF allows direct enforcement against senior managers (Central Bank of Ireland, 2023). This shift strengthens regulatory oversight and reinforces the principle that leadership must prioritize compliance and ethical decision-making.
Australia’s Financial Accountability Regime (FAR)
Australia first introduced the Banking Executive Accountability Regime (BEAR) in 2018 as a response to banking scandals, but enforcement was limited, leading to criticism that it lacked sufficient deterrence (Australian Prudential Regulation Authority, 2021). To address these shortcomings, the government expanded BEAR into the Financial Accountability Regime (FAR), which extends coverage to insurers and superannuation trustees and increases regulatory scrutiny over senior executives (Australian Treasury, 2023).
The FAR mandates that firms define key accountability roles, and it grants regulators the power to impose civil penalties or ban executives for misconduct (Australian Securities and Investments Commission, 2023). One of the most notable enforcement actions under the predecessor BEAR regime was against Westpac executives in the wake of the bank’s 2019 money-laundering scandal, which resulted in a record A$1.3 billion fine (Royal Commission into Misconduct in the Banking, Superannuation and Financial Services Industry, 2021). The FAR aims to expand such enforcement mechanisms, ensuring senior executives are held responsible for governance failures.
Other Global Developments
Beyond the UK, Ireland, and Australia, several jurisdictions have implemented similar accountability measures. Hong Kong’s Securities and Futures Commission introduced the “Manager-In-Charge” regime in 2017, requiring firms to designate specific managers responsible for key functions (Securities and Futures Commission, 2022). Singapore has taken a softer approach, with the Monetary Authority of Singapore issuing non-binding guidelines encouraging firms to enhance individual accountability at the senior level (Monetary Authority of Singapore, 2023).
The United States has no direct equivalent to the SMCR or IAF but relies on aggressive enforcement against individuals through the Department of Justice (DOJ) and the Securities and Exchange Commission (SEC). The DOJ’s “Yates Memo” (2015) reinforced the priority of prosecuting individuals for corporate misconduct, stating that holding executives personally accountable is essential to deterrence (U.S. Department of Justice, 2015). Recently, the SEC has pursued actions against senior leaders, including Theranos executives and Wells Fargo managers, reinforcing that individual accountability remains a priority even in the absence of a formal regime (Securities and Exchange Commission, 2023).
Conclusion: Accountability as the New Normal
Senior leaders must now operate under the reality that governance failures can result in personal liability. With the expansion of individual accountability regimes, executives are increasingly required to demonstrate proactive compliance, ethical leadership, and documented oversight. Regulators have shown they are willing to impose significant penalties, as seen in high-profile enforcement cases across multiple jurisdictions.
For firms, compliance should not be seen as a mere regulatory burden but as a critical component of sustainable business practices. Strengthening internal governance, fostering a culture of accountability, and ensuring robust oversight mechanisms will help mitigate risks. As regulatory expectations continue to evolve, financial institutions must stay ahead of these changes, embedding accountability into their leadership frameworks before enforcement actions force them to do so.
References
Arora, A. (2021) Corporate Governance and Accountability in the Financial Sector. Oxford: Oxford University Press.
Australian Prudential Regulation Authority (2021) Review of Banking Executive Accountability Regime. Canberra: APRA.
Australian Securities and Investments Commission (2023) Financial Accountability Regime: Regulatory Guidelines. Sydney: ASIC.
Australian Treasury (2023) Final Report on the Financial Accountability Regime. Canberra: Australian Government.
Bank of England (2022) Strengthening Accountability in Financial Services. London: BoE.
Central Bank of Ireland (2023) Implementation of the Individual Accountability Framework. Dublin: CBI.
Donnelly, P. (2022) ‘The Tracker Mortgage Scandal and Its Impact on Irish Financial Regulation’, Journal of Financial Regulation, 8(2), pp. 142-160.
FCA (2018) ‘Final Notice: Jes Staley’, Financial Conduct Authority Enforcement Report, pp. 12-15.
FCA (2023) Senior Managers and Certification Regime Review. London: FCA.
Ferran, E. (2022) ‘Regulating Bankers: The Evolution of Accountability Regimes’, European Business Law Review, 33(1), pp. 75-98.
Financial Stability Board (2023) Global Trends in Financial Regulation. Basel: FSB.
Moloney, N. (2023) Financial Regulation and Governance in Europe. Cambridge: Cambridge University Press.
Monetary Authority of Singapore (2023) Guidelines on Individual Accountability and Conduct. Singapore: MAS.
PRA (2022) ‘Final Notice: TSB Systems Failure’, Prudential Regulation Authority Enforcement Report, pp. 8-12.
Royal Commission into Misconduct in the Banking, Superannuation and Financial Services Industry (2021) Final Report. Canberra: Australian Government.
Securities and Exchange Commission (2023) Enforcement Actions Against Corporate Executives: 2023 Review. Washington, DC: SEC.
Securities and Futures Commission (2022) Manager-In-Charge Regime: Compliance and Best Practices. Hong Kong: SFC.
U.S. Department of Justice (2015) Individual Accountability for Corporate Wrongdoing (Yates Memo). Washington, DC: DOJ.