UK Parliamentary Commission on Banking Standards’ Final Report – ‘Changing banking for good’ calls for radical reform of professional banking standards
The Parliamentary Commission on Banking Standards, which was established in July 2012 following the exposure of LIBOR rigging and other banking malpractices, announced today that it has published its Final Report – ‘Changing banking for good’.
The report says that in order to restore the health and reputation of the banking industry, radical reform and better regulation is needed to improve standards across the banking industry. The Commission recommends that it should be a criminal offence if senior bank bankers are found to have recklessly misconducted management of a bank, with the offence carrying a possible custodial sentence.
Other recommendations include a new remuneration code to align risks taken and rewards received in remuneration, with more deferment of remunerations for longer periods. 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, there should be a new Senior Persons Regime, replacing the Approved Persons Regime.
Also the Commission has called for a new licensing regime, which will be underpinned by Banking Standards Rules to ensure that a full range of enforcement powers can be applied to those who can do serious harm to the banking industry, as well as new power for the regulator to cancel all outstanding deferred remuneration for senior bank employees, along with unvested pension rights and loss of office or change of control payments, if their banks needing taxpayer support.