FSA calls for tighter laws against failing bankers
Published: 1st Jul 2012 10:59:29
The law should be tightened to tackle misbehaviour in banking, says the head of the Financial Services Authority.
Adair Turner told the BBC's Andrew Marr programme there should be a presumption a director of a failed bank should not work in the industry again.
Lord Turner said the FSA's fine was its strongest available sanction.
Business Secretary Vince Cable is also considering criminal sanctions for bank directors.
Mr Cable those in charge of failed banks should face prosecution, a view echoed by Lord Turner.
The business secretary said the government would launch a consultation on criminal sanctions for the directors of failed banks later this week.
A survey by the consumer group Which? found popular support among those canvassed for a toughening of the law on malpractice among bankers.
It found more than three-quarters of people (78%) who responded think individuals should be personally prosecuted when banks break the law.
It also showed two-thirds (66%) were not confident the government would act in their best interests when introducing banking reforms.
Mr Cable believes greater involvement by shareholders would also help to rein-in wrongdoing by banks.
Writing in the Observer after Barclays was fined for trying to rig the Libor inter-bank lending rate, Mr Cable condemns the "incompetence, corruption and greed... endemic in British banking".
Libor (London Inter Bank Offered Rate) is the rate at which banks in London lend money to each other.
Mr Cable said shareholders "must get a stronger grip" to prevent corruption in banks.
Lord Turner said the FSA had been in talks with the Serious Fraud Office (SFO) and if there had been fraud the latter could bring a case against those implicated.
Ministers have announced an independent review of the Libor workings, which will be established next week and report by the end of summer.
Labour, the TUC and some Tory backbenchers want to go further with a public inquiry on banking, something that has been dismissed by the Treasury and the Bank of England.
Barclays boss Bob Diamond has been summoned to appear before the Treasury Select Committee on Wednesday and chairman, Marcus Agius, will also be questioned about the Libor scandal.
The bank was fined £290m ($450m) but Mr Cable said: "The public cannot understand how a corporate fine - which will be passed on to customers and shareholders - begins to address the problem.
He suggests four steps for sorting out the banking "mess":
On the role of shareholders, he added: "No-one at the top of Barclays will take responsibility for systemic abuse."
"Shareholders, the owners, have a major responsibility here. I am bringing in legislation to strengthen their control over pay and bonuses, through binding votes, but shareholders have to get a stronger grip on weak boards and out-of-control executives."
Shadow business secretary Chuka Umunna questioned the independence of the the body that represents the banks.
"We've got the absurd situation where the current chair of the British Bankers' Association (BBA), Marcus Agius, is also chair of Barclays," he told the BBC.
"He was chair of Barclays at the time that Barclays was providing erroneous information and lying to the BBA. And yet he is still in place as chair of the BBA. Now to most people this begins to make the BBA like a joke."
On Friday, the Financial Services Authority revealed separately that Barclays, HSBC, Royal Bank of Scotland and Lloyds Banking Group had agreed to pay compensation to customers who were mis-sold interest-rate hedging products.
Harvard CitationBBC News, 2012. FSA calls for tighter laws against failing bankers. [Online] (Updated 01 Jul 2012)
Available at: http://www.ukwirednews.com/news.php/1437954-FSA-calls-for-tighter-laws-against-failing-bankers [Accessed 12th May 2013]
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