Reckless bankers could face jail
The Government will legislate to ensure reckless bank bosses can be jailed and bonuses can be clawed back, David Cameron has said.
The Prime Minister said he accepted key recommendations in a parliamentary report and promised to act on them.
The Parliamentary Commission on Banking Standards called on the Government to hold senior bankers personally responsible for malpractice and introduce a new criminal offence for reckless management that carries a custodial sentence.
Its long-awaited final report suggests regulators should be given the power to defer bonuses for 10 years under plans to stamp out excessive pay practices.
The wider reforms proposed include setting up a new professional code of conduct and licensing bankers.
Answering questions in the Commons, Mr Cameron was pressed on whether he supported the recommendations on bonuses and criminal penalties. "Yes, I do support both of those measures," he said. "Obviously we need to take time to read this excellent report. But penalising, including criminal penalties against bankers who behave irresponsibly, I say yes. Also, making sure that banks who are in receipt of taxpayers' money that you can claw back... bonuses, I say yes too."
He said ministers would be using the Banking Bill currently going through parliament to implement the plans.
The Financial Services Consumer Panel welcomed the report and said it was right that bankers should have the same professional standards as doctors and solicitors, given the "devastating impact their recklessness can cause".
Mike Dailly, Consumer Panel working group chair, said: "All banking executives should demonstrate the highest levels of professional and ethical standards in line with their pay and status. Where these standards are not met they, like those in comparable professions, should feel the full weight of the law."
But lawyer Alistair Graham, litigation partner at Mayer Brown, warned it would be "extraordinarily difficult to imagine that an offence of reckless misconduct in the management of a bank will be successful" in the courts. "As a criminal offence, it will have to be proved beyond all reasonable doubt," he said.