Senior bankers found guilty of reckless misconduct should face jail, according to the UK Parliamentary Commission on Banking Standards, which was set up last year after the Barclays Libor-rigging scandal, and has just published its recommendations.
The Commission was put in place by UK Chancellor, George Osborne, last year after Barclays was fined £290m for rigging the Libor rate, adversely impacting treasurers’ derivatives and hedging programmes and consumer loans. The 500-page final report recommends the reckless misconduct charge be introduced in order to deter any further wrong-doing and make the prospect of jailing errant bankers in the UK a realistic one, while also strengthening the protection for whistleblowers.
Other recommends from the UK Parliamentary Commission on Banking Standards include:
- A ‘special measures’ regime that would mean intensive monitoring of banks that had lost the confidence of UK regulatory authorities. This idea stems from the breakdown in the relationship between Barclays and the then UK regulator the Financial Services Authority (FSA). Any bank put into such ‘special measures’ would have to prove their risk, oversight and operational procedures had improved before the intensive monitoring would stop.
- Banks should have a full-time chairman that knows the banking industry. Too many ‘cheerleaders’ have been in place previously merely rubber-stamping the aggressive expansion plans of chief executives.
- The bosses of any future bailed out banks should be stripped of their pay and pensions for the failure.
- Bonuses should be spread over 10 years – not the present three introduced since the 2008 crash – and the share, rather than cash pay-out, arrangement should continue.
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