Prompted by the failure of the Royal Bank of Scotland and in the spirit of Barclays travails, HM Treasury today launched a consultation on possible sanctions for directors of failed banks. The consultation document is here and the accompanying Treasury press release is here.
The two principal measures suggested in the consultation document are:
1. The introduction of a “rebuttable presumption” that the director of a failed bank is not suitable to be approved by the regulator to hold a position as a senior executive in a bank.
“The necessary legislation would be included in the Financial Services Bill. The Government considers that this would directly address some of the key lessons from the FSA report on RBS. This measure could be supported by complementary reforms (which the regulators could take forward) to clarify management responsibilities and change the regulatory duties of bank directors.”
2. The introduction of criminal sanctions for serious misconduct in the management of a bank.
“This would raise a number of complex issues, which could not be considered in appropriate detail on the timescale for the Financial Services Bill. If this proposal is taken forward, the Government would include the necessary legislation in another Bill during the present Parliament.”
The consultation closes on 30 September 2012.
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