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LONDON (Reuters) - British banks are failing to set out clear areas of responsibility for top staff, making it harder to pinpoint who is to blame when things go wrong, Britain's markets watchdog said on Tuesday.
Britain introduced the Senior Managers Regime (SMR) last year, seeking to force banks to say which officials oversee specific operations and make it easier to sanction people.
It followed lawmaker concerns that few individuals were punished after taxpayers had to bail out lenders during the 2007-09 financial crisis.
"In some cases, we have seen evidence of overlapping or unclear allocation of responsibilities," the FCA said in a statement marking the first anniversary of the new rules.
"In other cases, firms appear to be sharing responsibility amongst some staff at different levels of management, obscuring who is genuinely responsible."
From Tuesday, a second leg of the regime comes into force -- so-called certification of less senior staff, such as investment and mortgage advisers, who could also do significant harm to their firm and customers.
All senior managers must be vetted by regulators before taking up their post, but the banks apply the certification regime themselves.
Katie Stephen, a dispute resolution lawyer at Norton Rose Fulbright, said certification means that the pool of people facing personal sanctions in the event of breaches, is now much larger.
"In time, we may see an increase in enforcement activity extending beyond senior management to those to whom they have delegated, and on whom they rely from day-to-day. The buck may now have a few more stops," Stephen said.
The government has decided that the SMR regime must be rolled out across the whole financial sector from 2018, with a fuller version for insurers.
"We intend that our extended regime will be clear, simple and proportionate," the FCA said.
"During the second quarter of this year we will be consulting widely with industry, firms and consumers on our proposals. We expect implementation to begin from 2018."
Britain has been alone in pushing ahead with direct accountability rules and is being watched by other countries to see if they are worth copying.
Reporting by Huw Jones; Editing by Keith Weir