Britain says reckless bankers could face jail

Wed Jun 19, 2013 9:59am EDT
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By Matt Scuffham

LONDON (Reuters) - Bankers who are reckless with customers' or taxpayers' money could face criminal charges and have bonuses and pensions clawed back, according to proposals backed by Britain's prime minister on Wednesday.

Many Britons blame bankers' risk-taking for the 2008 financial crisis and subsequent economic slump and were furious when the former boss of RBS (RBS.L: Quote) left the bank with a pension of almost 17 million pounds even after a state rescue.

He later agreed to a cut and was stripped of his knighthood but it was one in a series of banking scandals that increased pressure on Prime Minister David Cameron to get tougher on a sector contributing billions of pounds to the British economy.

The parliamentary commission on banking standards he set up last year after Barclays (BARC.L: Quote) was fined for manipulating interest rate benchmarks said on Wednesday the law should be changed so that bankers found guilty of "reckless misconduct in the management of a bank" could face jail.

The UK Treasury said the new rules could be in place before the end of 2015 but lawyers said it would be hard to prove when a banker had taken too much risk or simply made a mistake.

Asked in parliament whether he supported the report's recommendations on criminal penalties and pay, Cameron said: "Penalizing, including criminal penalties ... bankers who behave irresponsibly, I say yes."

Lawyers doubted that new laws would be effective.

"There is likely to be a considerable burden of proof - merely miscalculating or being negligent in an assessment of risk most likely won't be enough," said Michael Isaacs, head of banking litigation at law firm Pinsent Masons.   Continued...

The City of London business district is seen through a wire fence in London February 28, 2013. REUTERS/Stefan Wermuth