Members of the British government are considering a law that could greatly impact the banking industry in the United Kingdom — by threatening executives with possible jail time for “reckless misconduct.” The bosses of failing banks could also lose the right to claim bonuses for up to ten years.
The news was delivered Wednesday by the Parliamentary Commission on Banking Standards, a group that includes lawmakers, the Archbishop of Canterbury and a former chancellor. The commission’s 527-page report said, among other things, that this new criminal offence would make sure that top executives paid for their “shocking and widespread malpractice.” Although it is not binding, this report is being closely followed in the U.K. because it could likely influence regulators.
Commission chairman Andrew Tyrie said, “Under our recommendations, 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. That has not been the case up to now.”
According to the website MarketWatch, British lenders including Barclays, Royal Bank of Scotland Group and Lloyds Banking Group are working together to coordinate responses to the report. Some are speculating that this could drive bankers out of the UK, but Tyrie said this was “absolute nonsense.” He reiterated his point that this new measure was needed because bankers could harm the whole economy.
“Bankers are different,” he said in an interview on BBC’s Today show. “Bankers and banks are in a position where they cannot just do harm to their shareholders but do harm to the whole economy and end up putting taxpayers on the hook. Remember this can only be triggered — the reckless misconduct investigation — when there has been taxpayer support for a bank.”
No British banker has been sent to prison since the financial crash began in 2007, The Daily Mail reports.