The UK government has responded to the Parliamentary Commission on Banking Standard’s (PCBS) report, ‘Changing banking for good’ by announcing that it intends to strengthen standards in banking by:

 

1.    Introducing a criminal offence for reckless misconduct for senior bankers. Those found guilty could face a jail sentence

2.    Working with the regulators to ensure bankers’ pay is aligned with their performance, including allowing bonuses to be deferred for up to ten years and enabling 100 per cent claw back of bonuses where banks receive state aid

3.    Introducing a tough new regime governing the behaviour of senior bank staff and new rules to promote higher standards for all bank staff

4.    Reversing the burden of proof so that bank bosses are held accountable for breaches within their areas of responsibility

5.    Working with the regulators, to strengthen corporate governance to ensure that firms have the correct systems in place to identify risks and maintain standards on ethics and culture.

 

Cultural reform in the banking sector marks the next step in the government’s plan to move the whole sector from rescue to recovery and ensure that UK banks demonstrate the highest standards, and are able to support business and drive economic growth.

 

Secretary of State for Business, Vince Cable said:

 

“If we’re to get our economy back on track, we need to get the banking system back on track first.

 

Creating new powers to jail bankers who are reckless with other people’s money and getting more competition into banking, is a start. The £4 billion business bank that I’m setting up will also help more small businesses get the cash they need.”

 

The Government’s response is available HERE.

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