The Government is being urged to legislate to ensure that “reckless” bankers are jailed and bonuses are clawed back, following the publication yesterday (June 19) of a long-awaited report on the banking industry commissioned by Chancellor George Osborne.
The 571-page report from the cross-party Parliamentary Commission on Banking Standards that was set up in the wake of the Libor scandal a year ago has called on the Government to hold senior bankers personally responsible for malpractice and to introduce a new criminal offence for reckless management, which would carry a custodial sentence.
The report also proposes setting up a new professional code of conduct and licensing bankers, as well as giving regulators the power to defer bonuses for 10 years in a bid to stamp out excessive pay practices.
Led by Conservative MP and former member of the Bank of England’s Monetary Policy Committee, Andrew Tyrie, and counting the Archbishop of Canterbury and former Chancellor Lord Lawson among its members, the commission is urging the Government to make bankers more accountable for their actions.
However, the commission’s report does not lay the blame solely at the door of bankers but also with financial regulators and government’s, which have “contributed to the decline in standards”. The report describes the Government’s interference in the running of the bailed out banks RBS and Lloyds as “not acceptable”.
The Treasury is poised to make amendments to the Finance Bill to adopt the recommendations, meaning that the legislation could be in place as early as 2015. It consulted last year on the possibility of criminal sanctions for directors of failed banks but has yet to publish its conclusions. A spokesman described the report as “very impressive” and said that the department will respond to it before the summer recess.