But there are many others.   Second, good cop: areas where we and firms are collectively facing a shared challenge. There is no inherent conflict between the public and private interest – we have a shared interest in mitigating the risk, and there is a role for both public and private sectors. Cyber is the classic case of these shared endeavours. With the post-crisis reform job now largely complete, I will set out what firms should expect to see from the PRA across these areas as we enter a new phase. Bad cop Let me turn first to areas where our incentives and those of firms are not perfectly aligned, and where there may therefore be a degree of tension between us as we seek to secure the benefits of the new system we have spent the last decade putting in place. I will give you five examples – in highly abridged form, as I’m determined to beat Andrew’s time. First, our brand-new retail ring-fence, the last major section of which was erected by a team at RBS on the weekend of 12 August. This has been a truly massive operation, including the three largest-ever bank authorisations here in the UK, over £ billion of assets moved and over 1.3 million sort code changes. So I would like to say a big thank you to all of the teams at the PRA and at the banks for some really hard work during the construction phase.
But the SMR is not an end in itself – the accountability it delivers should contribute to safety and soundness. Firms should therefore expect us to make more use of the SMR to deliver supervisory priorities. There is no magic to this: we will simply ask, when we set out those priorities, which senior manager is on the hook to deliver them, and what will happen if they do not? We want to know who is on the hook if things go badly wrong, and have recently asked firms to spell this out in developing areas such a crypto-assets, operational resilience and algo-trading. And enforcement cases have shown that we can, and will, take action against Senior Managers if our red lines are crossed. However, we are not an enforcement-led regulator: in my opinion, the real prudential value of the regime lies in creating opportunities for preventative or remedial action through supervision. Which brings me to my third example: pay. This has been another area of massive reform. No pay system is perfect, but I remain convinced that the 100% cash, paid out up-front bonus systems which existed for risk-takers in some of our largest firms before the crisis were an important part of what broke the financial system. The new system of deferral, malus and clawback is much safer. So we are not planning to come up with some new approach at this stage – seven year deferral is long enough, and has a pleasingly biblical ring to it.