UK lawmakers call for 'reckless' bankers to face jail

Tue Jun 18, 2013 7:02pm EDT
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By Matt Scuffham

LONDON (Reuters) - Britain should introduce laws making it possible to jail "reckless" bankers and claw back past bonus and pension awards, an influential panel of lawmakers said on Wednesday.

The Parliamentary Commission on Banking Standards, set up by the government last year after Barclays (BARC.L: Quote) was fined over the manipulation of global interest rate benchmarks, said deep lapses in standards had been commonplace and recent scandals had exposed "shocking and widespread malpractice".

"Taxpayers and customers have lost out. The economy has suffered. The reputation of the financial sector has been gravely damaged. Trust in banking has fallen to a new low," the commission's chairman Andrew Tyrie said in a 500-page report.

The cross-party group, which includes former British finance minister Nigel Lawson and Justin Welby, head of the Anglican church, recommended senior bankers are held personally responsible and regulators granted greater powers.

The commission is recommending a new criminal offence of "reckless misconduct in the management of a bank" which would carry a jail sentence for the most serious cases.

"Senior bankers who seriously damage their banks or put taxpayers' money at risk can expect to be fined, banned from the industry, or, in the worst cases, go to jail," said Tyrie.

The commission recommended the industry's 'approved persons' regime be scrapped and replaced with two new registers - one for senior bankers and one for other bank employees. It said the new system would ensure the most important responsibilities within banks were assigned to specific individuals.

The 'Senior Persons Regime' would enable those responsible for failures to be identified more easily and provide a stronger basis for action to be taken against them, the report said.   Continued...