Forbes Solicitors: The Changing Regulatory Landscape – What it means for organisations, directors and senior managers

Everyone loves a promotion!  A shiny new badge, a pay rise, a nice little flurry of LinkedIn congrats … followed by the cold sweat when you realise what new responsibilities await.

“But take care,” warns Regulatory and Professional Disciplinary specialist Stephen Barnfield, “that shiny new badge has a very sharp pin on the back!”

Being elevated to a senior position in an organisation has had mixed implications over the years in terms of regulatory risk. It’s essential for organisations, directors and managers to track that shifting risk over the years to keep it in proper and current proportion – particularly this year with two significant legal developments happening this year: the Crime and Policing Act 2026 (‘CPA’) and the Sentencing Act 2026 (‘SA’).

The CPA is broad and far reaching in scope. Section 254 of the Act imposes a new category of corporate offending on companies and partnerships wherever an offence arises where a ‘senior manager’ is acting within the actual or apparent scope of their authority.

What is a senior manager?

Echoing the test for the Corporate Manslaughter and Corporate Homicide Act 2007 (CMCHA), it is someone who plays a significant role in the making of decisions about how the whole or a substantial part of the activities of the company or partnership are to be managed or organised, or the managing or organising of the whole or a substantial part of those activities. So, in the same way that a company might be held to account under CMCHA for senior management failings causing death though gross breach of duty, they will now be held to account for any criminality conducted by a senior manager within the actual or apparent scope of their authority.

What does it cover?

Potentially anything that fits the brief – anything within their authority, so possibly acts of violence or sexual offences, myriad fraud offences, compliance breaches, failures to comply with court orders. The ambit is broad, the explanatory note observes an intention to cover not just ‘individuals who perform an executive function or are board members, it covers any individual who falls within the definition, irrespective of their title, remuneration, qualifications or employment status’.

We expect to see arguments over extent of actual and apparent authority: the explanatory notes again make plain that the authority need not be to commit the given criminal act but to act in the general sphere: so, security might lead to violence; financial control to fraud; personnel management to issues of modern slavery; IT/data control to issues under applicable legislation.

What were once shameful individual transgressions that no doubt carried reputational harm, now threaten serious criminal liability.

How great is the risk?

Companies have faced corporate manslaughter investigations probably every week if not every day since CMCHA came into force. Consider that this is the case even in a heavily regulated, well-resourced and well understood area where compliance levels are, across the board, relatively high as a result. Extension of that form of liability to other areas, without theoretical limit, is likely to expose gaping procedural holes that leave companies exposed not just to investigation, but prosecution and conviction.

At the same time, whilst CPA threatens new areas of risk, SA provides a glimmer of hope to those actually facing individual prosecutions such as those under section 37 of the 1974 Act. But it may be a glimmer of hope that companies come to regret.

Section 1 provides for presumed suspension of prison sentences of 12 months and under save in exceptional circumstances.

Threatened penalties of up to two years, delineated by the Sentencing Guidelines Council in careful detail, might now lose some of the terror they carried before: even for the highest category of criminality (that is ‘very high culpability’ and high risk of death or serious injury), the starting point for a court would be 18 months; factor in discount for credit for an early guilty plea of up to 1/3 and even that sort of case might fall into the category of a presumed suspension. Considering that many cases are ‘pitched’ at lower thresholds with starting points of one year or even six months, the likelihood of an immediate custodial sentence is greatly reduced.

Make no mistake though – SA does not extinguish the risk of prosecution or conviction.

What the practical effect of all of this remains to be seen. Will directors, who have traditionally fought hard against individual liability, rush for early pleas to duck under the 12 month threshold and secure a presumed suspended sentence?

If so, will companies find themselves implicated by such strategic admissions, rendering corporate defence significantly more difficult?

For further guidance on this and other regulatory matters, contact Stephen Barnfield at Forbes Solicitors.