'Reckless' senior bankers will be jailed, says George Osborne
New amendments to Banking Reform Bill will mean irresponsible bankers could face seven years in prison
THE government has announced the final phase of what it calls the "biggest ever overhaul of the UK banking system". The proposed changes mean senior bankers could be jailed for up to seven years if they are found to have committed "reckless misconduct" leading to the fall of a bank.
Yesterday George Osborne set out 86 amendments to the Treasury's Banking Reform Bill, which is designed to protect Britain's economy from another financial crisis. The amendments include laws designed to increase competition in the banking sector and to separate the high street banks from their trading arms in the City in order to protect taxpayers.
The reckless misconduct charge was one of the main recommendations from the Parliamentary Commission on Banking Standards, created in the wake of the Libor rigging scandal, earlier this year.
The bill's amendment would mean that senior managers could be charged with reckless misconduct if they knowingly take decisions that could lead to the collapse of their bank. But according to The Guardian, lawyers have already questioned whether or not it will be possible to bring the charge in practice.
The Treasury said the latest reforms, which will come into effect in 2014, would create "a stronger and safer banking system".
Another key aspect of Osborne's new amendments will provide the Bank of England with new powers to identify risks and address them quickly when found. The bank will be allowed to conduct annual stress tests and checks and is likely to stipulate that banks must hold more capital than international standards dictate to ensure they are more stable.
A Treasury spokesman said: "Already we have put the Bank of England back at the centre of prudential supervision and now, through the Banking Reform Bill, we are delivering on our promise to increase competition, drive up standards and increase financial stability." ·