Reckless banking should become criminal offence
The Parliamentary Commission on Banking Standards has published its final report today, outlining proposals for radical reform aimed at improving standards across the industry.
The Commission was established last year in the wake of the LIBOR scandal to conduct an inquiry into professional standards and culture in the UK banking sector, and to make recommendations for legislative and other action.
Key recommendations are as follows:
A new Senior Persons Regime, replacing the Approved Persons Regime, to ensure that the most important responsibilities within banks are assigned to specific, senior individuals so they can be held fully accountable for their decisions and the standards of their banks in these areas.
A new licensing regime underpinned by Banking Standards Rules to ensure those who can do serious harm are subject to the full range of enforcement powers.
A new criminal offence for Senior Persons of reckless misconduct in the management of a bank, carrying a custodial sentence.
A new remuneration code better to align risks taken and rewards received in remuneration, with much more remuneration to be deferred and for much longer.
A new power for the regulator to cancel all outstanding deferred remuneration, along with unvested pension rights and loss of office or change of control payments, for senior bank employees in the event of their banks needing taxpayer support, creating a major new incentive on bankers to avoid such risks.