Bankers face jail under regulation rethink

 
26 April 2013

Bankers could be jailed for behaving recklessly or dishonestly under proposals being discussed by the Banking Commission.

Members of the commission are determined that bad bankers should be held personally responsible for catastrophic failures caused by decisions that breached proper standards.

However, members of the cross-party group of MPs and peers are still divided on how to achieve a robust set of rules that would punish bad behaviour and encourage greater responsibility in the industry.

One member said the fear was that excessively complex rules and laws would backfire by discouraging a sense of personal duty. “The best regulator is when people know instinctively what is right and wrong,” the member said, adding that there was support for the principle of imprisonment for the worst culprits.

Some commissioners favour professional regulation similar to the medical profession, rejecting arguments from bankers that the financial industry is too complex.

Another proposal put to the commission is a law of “reckless endangerment” modelled on US laws that allow executives to be prosecuted for putting public health or safety at risk through decisions at work.

Three weeks ago, an interim report into the failure of HBOS stated: “Those responsible for bank failures should be held more directly accountable for their actions and face sanctions accordingly.”

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