This is an eminently sensible proposition. If a bank goes bust then the chief executive should shoulder the blame. Either he knew about the problems and did not act or he did not know about the problems in which case he damn well should have known.
Although this is natural common sense the legal profession would argue it flies in the face of natural law and challenges head-on the principle of innocent until proven otherwise. The SFA has been canvassing its members on the reversal of burden of proof notion and there has already been a fairly robust debate. Now the matter is with the Securities and Investments Board, which will pronounce next month on the responsibilities of senior executives.
It may well be that the SFA is deemed too radical. However, by taking such a forthright stance it has made it plain just how defective the current rulebook is. It is now becoming accepted in regulatory circles that the responsibilities of executive management do need to be clarified to an extent that they cannot simply pass the buck to their lieutenants.
The aim is not to make life more uncomfortable for senior managers but to ensure that the regulatory implications are embraced by as wide a circle as possible. This aim of establishing a regulatory regime which has the respect and support of those who are regulated has become the hallmark of the SFA's philosophy. It is a philosophy which should be mirrored elsewhere.Reuse content