Streamlining the Regime, Preserving the Owner
In April 2026, HM Treasury and the United Kingdom’s two financial regulators published the first phase of reforms to the Senior Managers and Certification Regime, the individual-accountability framework in place across British banking since March 2016. Their stated ambition is to cut the regime’s administrative burden by half.
A second phase, which requires legislation, would remove the certification of middle managers from primary legislation and replace prior regulatory approval for certain senior appointments with a notification process.
The official diagnosis is straightforward: after a decade of operation, several statutory requirements no longer deliver incremental improvements in governance or conduct, yet continue to impose administrative costs.
The reform will be closely watched in boardrooms far beyond London. The danger lies in drawing the wrong conclusion: that individual accountability was an overreaction to the post-crisis environment and is now being dismantled.
It is not.
Written statements of responsibility remain, as does the standard under which a senior manager, including the chair of the board, may be held accountable for failing to take reasonable steps to prevent a breach within that manager’s area of responsibility.
The process is being streamlined. Ownership remains.
The Strongest Case for the Committee
That mistaken interpretation rests on an argument that deserves to be taken seriously: the belief that collective responsibility can substitute for individual accountability.
Much of the argument is valid.
Material banking decisions are genuinely collective. A large credit exposure may involve origination, risk, finance, treasury, and legal. The separation of those roles is a prudential requirement.
That is why the Basel Committee’s corporate-governance principles distinguish among the role of the business, the risk-management function, and internal audit.
Committees bring together information that no single executive possesses. They constrain overconfident individuals and distribute the burden of difficult decisions. Their defenders rightly point out that a bank governed by a single will is not inherently safer.
Individual accountability also has well-known side effects. Executives may focus on documenting that they took reasonable steps rather than on taking them. Decisions may be escalated for self-protection, and senior roles may become harder to fill.
In the United Kingdom’s 2023 consultation, the industry raised concerns about the burden and friction created by the regime, particularly in the appointment of senior executives. The reform accepted part of that argument.
Viewed in this light, collective decision-making is not a design flaw. It is the design.
The argument fails only in its final inference: the assumption that because a decision can be shared, the obligation to correct it in time can also be shared.
Collective Governance Without Ownership
Jurisdictions that experienced recent institutional failures reached the opposite conclusion.
Ireland began applying its senior executive accountability regime in July 2024. In March of that year, Australia replaced its 2018 banking accountability regime with a broader framework. Following the collapse of Credit Suisse, Switzerland proposed its own regime in 2024, with a clear allocation of individual responsibilities.
Although the frameworks differ, all three seek to establish where accountability ultimately resides.
The Australian case explains why.
In May 2018, the Australian Prudential Regulation Authority concluded that Commonwealth Bank of Australia’s sustained success had dulled its ability to detect and respond to signs of deterioration, even though its financial strength was not in question.
Its non-financial risks were poorly understood and lacked clear ownership.
APRA identified an excessively collaborative and collegial environment that weakened constructive challenge, slowed decision-making, and diluted the focus on outcomes.
The bank did not lack committees, data, or controls.
It lacked owners.
Every bank will recognize the pattern.
The commercial function points out that it does not set risk policy. Risk clarifies that it does not run the business. The committee receives the information and assumes that the relevant functions are responsible for deciding what to do.
Every explanation is correct.
No one intervenes.
That is the risk that collective governance accumulates without making it visible. The institution continues to generate data, identify deviations, and improve its reporting. It loses the ability to intervene long before it loses the ability to diagnose.
What is quietly severed is the link between the signal and the decision.
The Cost Emerges Over Time
That break rarely causes an immediate collapse.
Its cost accumulates.
Every monitoring cycle that closes without a clear intervention allows a correctable deviation to mature until it requires a full restructuring.
By the time the cost becomes visible, it is often measured in capital.
APRA imposed a A$1 billion add-on to the Australian bank’s minimum capital requirement, to remain in place until the regulator was satisfied that the recommendations had been addressed.
The enforceable undertaking entered into by the bank also required it to explain how the findings had been reflected in executive remuneration.
Governance, culture, and accountability failures ultimately consumed capital and brought executive compensation under regulatory scrutiny.
Switzerland’s proposal points to a second, less visible cost. Its proposed accountability regime was accompanied by rules allowing bonuses to be deferred and subsequently clawed back.
The logic is straightforward: accountability is enforceable only when it has been allocated before the damage occurs. Reconstructing it after the fact is far more difficult.
A damaging organizational lesson then takes hold.
If repeated inaction carries no consequences, the organization learns that the operating model demands explanations, not decisions.
This does not justify penalizing every adverse outcome. In banking, a reasonable decision can still produce a negative result.
The proper test is whether the individual understood the situation, had sufficient authority, and took the reasonable steps available within that individual’s remit.
Two distinct failures must therefore be separated.
If no one knows who is expected to decide, the problem is accountability.
If the responsible individual has been clearly identified but continues to defer action, the problem is leadership.
