UK: First PRA/FCA case under the Senior Managers Regime - Mr James Staley and what is expected of a CEO

The first case brought by the Prudential Regulation Authority and Financial Conduct Authority under the Senior Managers Regime has seen the chief executive of Barclays Group, Mr James Staley, fined £642,430. Mr Staley was found to have breached Individual Conduct Rule 2 - the requirement to act with due skill, care and diligence - in respect of his attempt to identify the author of an anonymous letter, purporting to be from a Barclays shareholder, in which various allegations were made (some of which concerned Mr Staley). A copy of the final notice is available here (pdf) and this contains the following observations on the expectations of the CEO (paras. 4.3 to 4.6):

The CEO is the most senior executive director on the board, and therefore has a crucial role to play in ensuring that their firm meets the standards expected of it. A CEO is expected to identify conflicts of interest and be appropriately alert to potential whistleblowing situations. As such, they are expected to demonstrate the highest standard of integrity and to act with due skill, care and diligence in carrying out their functions.

The CEO has responsibility for proposing strategy to the board and for delivering the strategy as agreed. Further, the CEO has, with the support of the executive team, primary responsibility for setting an example to the firm’s employees, and communicating to them the expectations of the board in relation to the firm’s culture, values and behaviours. 

Further, a CEO of an authorised firm must comply with ICR 2, acting with due skill, care and diligence at all times in performing their role. The standard is an objective one and requires a CEO to exercise the degree of due skill, care and diligence as a reasonable CEO would exercise in like circumstances.

The steps that a person needs to take to comply with ICR 2 will be informed by, amongst other things, the circumstances, the specific nature of their role and their experience. Given the crucial role of the CEO, the expectations of the CEO will be more exacting than for other employees of their firm. This is consistent with the CEO’s responsibility for setting an example to the firm’s employees. For example, where a CEO is faced with circumstances that might undermine the impartiality of their judgement, they need to ensure that appropriate standards of probity and governance are maintained".