The parliamentary commission on banking standards is calling for the approved persons regime to be scrapped for banking staff and replaced with a two-tier system.
In its long-awaited final report, published this week, the commission says the current regime is a “complex and confused mess”.
It proposes the creation of a senior persons regime for top management which would make it easier for regulators to hold individuals to account.
It also calls for a licensing regime that would cover most other bank staff and subject them to a revised set of banking standards.
The commission also recommends the creation of a criminal offence for “reckless misconduct in the management of a bank”, which would carry a prison sentence.
Commission chair Andrew Tyrie says: “Replacing the discredited approved persons regime with the senior persons regime would create meaningful lines of personal accountability, changing behaviour and making enforcement against individuals easier.”
Ethics Foundation founder David Jackman says: “This is an excellent idea. The approved persons regime is costly for what it achieves. We need a meaningful licensing system with teeth and individual responsibility.”
An FCA spokesman says: “The FCA is placing a far greater emphasis on individual responsibility and we will hold people to account when things go wrong. This is a key regulatory focus for us.
“We continue to look at what further steps we can take to strengthen that part of the regulatory regime and the report’s recommendations will be part of that.”
Read our full coverage of the Banking Commission’s final recommendations: