The U.K. will not bring in new rules which would have made senior executives prove that they had done everything possible to avert failings on their watch, after criticism from the country's banking sector.
The Bank of England and Financial Conduct Authority (FCA) both confirmed that the controversial proposals had been abandoned, in statements early Thursday morning.
Tracey McDermott, acting chief executive of the FCA, said: "While the presumption of responsibility could have been helpful, it was never a panacea. There has been significant industry focus on this one, small element of the reforms, which risked distracting senior management within firms from implementing both the letter and spirit of the regime."
The move had been described as effectively making senior staff whose juniors are found to have acted wrongly "guilty until proven innocent". It could have reversed the "burden of proof" onto the individual managers to show they didn't fail, rather than on prosecutors to prove that they did. It was one of a number of regulations, introduced following the credit crisis and subsequent scandals in the sector, aimed at greater punishment of white-collar crime.
There were concerns in the banking sector that it would dissuade bankers from moving to - or staying in – London.
The U.K. government has also recently reduced a bank levy, in response to HSBC and Standard Chartered reviewing their headquarter location in London. The departure of Martin Wheatley, who had vowed to "shoot first" at those suspected of financial crime, as head of the FCA has removed another potential threat of heavier regulation.
- By CNBC's Catherine Boyle
