The Parliamentary Commission on Banking Standards, led by Andrew Tyrie British Member of Parliament , has published its eagerly awaited report. Here are the key points.
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.
Moreover, here is the reaction from the financial sector. Treasury spokesman declared “There are many recommendations in it which will help the Government’s plan to create a stronger and safer banking system. This comprehensive report, produced in less than a year, vindicates the judgment that a parliamentary commission would be swifter and more appropriate than a lengthy public inquiry that others proposed at the time.” “The Government publicly welcomes the Commission’s recommendations on increased personal responsibility, especially at a senior level, increased professional judgment by regulators, and better functioning markets. We will now get on with a swift response and will report before the summer recess
Ed Balls, Shadow Chancellor said “after the global financial crisis and the banking scandals that followed we need cultural change and radical reform to protect taxpayers, rebuild public confidence in the banks and ensure that in future they work to support the wider economy. This report sets out a radical blueprint for change on professional standards, regulation, competition, pay and accountability. It is vital that the Government and the banks rise to the challenge.“
Source : Telegraph