Proposed regulations aim to make bankers more accountable for their actions, but will they have a tangible impact on crumbling financial systems?
Bosses of leading City firms are to be made more accountable for their actions under new proposals that could make them wait up to seven years for their bonuses and face jail if their banks fail.
The two main City regulators, the Financial Conduct Authority and Prudential Regulation Authority, have set out lengthy consultations aimed at framing a new licensing regime for bankers, which they hope to be in force by January 2015.
Under it, bankers would be subjected to annual checks to ensure they comply with the new rules, and those involved in failures would be deemed ‘guilty until proven innocent’.
However, lawyers believe it is unlikely anyone would face jail despite the attempt to introduce a new criminal offence. Alison McHaffe, partner with law firm CMS, told the Guardian: “Such prosecutions are likely to be rare. This is not only because lessons have been learned from the financial crisis but also because attributing criminal liability to individuals for a bank’s decisions will be very difficult to establish and prove.”
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Tony Greenham, head of finance and business at the New Economics Foundation, believes the new regulations risk ‘treating the symptoms rather than the cause’ of the banking crisis.
“If you ask yourself whether the financial system looks fundamentally different to before the financial crash, the answer can only be ‘no’,” he said. “There is still an intolerable concentration of power in the hands of a small group of unaccountable and uncontrollable global financial corporations, who each have fingers in far too many pies.
“Locking away a few wrongdoers who are unlucky enough to get caught might feel good at the time, but will do nothing to change a broken and dysfunctional financial system.”
