The UK’s Financial Conduct Authority intends to drop plans to hold heads of legal departments at banks and insurance firms responsible for ignoring misconduct because it would hamper lawyers from giving independent legal advice. General counsels will be excluded from the new accountability regime for senior managers.
Binding legal counsel to the accountability provisions would make legal teams more conservative and create a conflict between confidentiality requirements and acting in the clients’ best interest. The laws of legal privilege may restrict the obligations in practice.
While no longer forcing heads of legal to be senior managers, the regulator said it won’t stop lawyers from performing the same tasks as top executives. In those instances, general counsels will count as senior managers. Firms should therefore clearly define employees’ roles.
This is worth thinking about in South Africa for the same goods reasons. The question here will currently be whether the head of legal falls within the definition of ‘key person’ in section 1 of the Financial Sector Regulation Act.