MANAGING D&O RISKS AND LIABILITIES FOR FINANCIAL INSTITUTIONS
R&C: How would you describe the current risk and liabilities landscape facing directors & officers (D&Os) at financial institutions (FIs)? What new exposures have you observed in recent months?
Stevenson: The landscape is definitely evolving; anything that is an issue for a company has the real potential to become a D&O issue. The immediate issue of the EU General Data Protection Regulation (GDPR) and data security, and coping with post-Brexit uncertainties, especially for exporters of goods and services, are featuring high on board agendas. Additionally, financial services organisations face regulatory change in the form of the UK’s Senior Managers & Certification Regime (SMCR). While it has been in place for some time for banks, it is being extended to cover insurers and firms solely regulated by the Financial Conduct Authority (FCA). It raises the stakes for senior managers who now have to take personal responsibility for their actions and be able to demonstrate where responsibility lies and that staff clearly understand this. It requires that staff are trained and the FCA is notified of any breaches of Conduct Rules. For organisations with large compliance teams, it is going to be less of an issue; but for smaller, niche organisations without the back-up of a specialist corporate department, it is going to increase their liabilities and risk exposures.
Apr-Jun 2018 Issue
Reed Smith LLP
Skadden, Arps, Slate, Meagher & Flom LLP