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FCA decision on General Counsel as Senior Managers – delayed or dropped?


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Summary: The FCA’s decision to shelve the possible designation of General Counsel and Heads of Legal as Senior Management Functions under the Senior Managers and Certification Regime will undoubtedly be welcomed by most in-house lawyers. However, due to the somewhat unusual manner of the announcement, it is likely that many of those affected will be unaware of the FCA’s decision not to proceed with this controversial idea, at least for the time being.

When the FCA announced, back in September 2016 (Discussion Paper 16/4), that it was consulting on whether General Counsel and Heads of Legal at authorised firms should be designated as Senior Management Functions under the Senior Managers and Certification Regime, the idea was met with trenchant opposition from most members of the in-house legal community.

A heated debate ensued and the Association for Financial Markets in Europe and the British Bankers Association wrote a joint letter to the FCA expressing serious concern over the prospect of senior in-house lawyers being caught by the regime.  They felt that designating General Counsel and Heads of Legal as Senior Managers “could have considerable potentially adverse implications for culture within banks and for the in-house Legal profession”.  Much of this opposition centred on the nature of the General Counsel and Head of Legal role, the need for independence and impartiality and the desire to avoid prejudicing legal privilege.  In addition, the Law Society weighed in in late 2017 with their response, raising concerns about potential conflicts of interest between in-house lawyers and their employers if General Counsels and Heads of Legal were designated by the FCA as Senior Managers for the purposes of its accountability regime.

To my mind, the two most remarkable aspects of this debate are the length of time it has taken for the FCA to come to a decision (albeit not a conclusive one) and the manner in which it publicised that decision. 

“Significant uncertainty”

The controversy began more than two years ago, in February 2016, when the FCA issued a press release promising to consult on the issue, due to what the regulator acknowledged was “significant uncertainty” ahead of the Senior Managers Regime coming into force in March 2016.  After a delay of almost eight months, the FCA issued a Discussion Paper at the end of September 2016 setting out arguments for and against.  Comments were requested by 9 January 2017.  Nothing further was heard on the subject from the FCA for some 15 months.

Then, at the FCA’s press conference on 9 April launching the FCA’s 2018/19 Business Plan, Andrew Bailey gave the following reply: “There has been a question raised in the context of the Senior Managers Regime about whether general counsel should be a responsible function. That isn’t an easy question, because obviously it raises big issues about the role of legal advice and so on in firms, but it has been raised, including by lawyers, I should say. We were going to do some work on that. We will do some work in the future on that, but it isn’t going to happen in the next year.”

So, more than two years after it acknowledged the confusion that exists about the role of the General Counsel or Head of Legal in the context of the Senior Managers Regime, the FCA has declared that it is going to “do some work” on this difficult question but not until 2019/20 at the earliest.  Interestingly, the ostensible reason for the delay is the FCA’s preoccupation with Brexit, which is seemingly consuming so much of the regulator’s resources that it is unable to move forward with much of its other work.


The FCA has kicked its decision on the extension of the Senior Managers Regime to General Counsel and Head of Legal into the long grass.  It now remains to be seen whether the FCA resurrects this controversial prospect.  If you would like to discuss this, or the Senior Managers regime more generally, please contact Sidney Myers.

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