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FSA: Failed bank bosses could be banned from top jobs

The FSA is putting together plans which could see former directors of failed banks being banned from running financial institutions.

The regulator’s business plan, published yesterday, says the FSA will is looking at a number of ways to make it easier to refuse an approved persons application. The FSA will set these out is a discussion paper set to be published in the first six months of this year.

It says: “We are examining various options to make it easier to refuse an application for an approved persons status on the basis that the person’s previous role as a director of a bank that failed raises fundamental questions about their competence or general suitability to perform a similar role again.”

Tens of billions of pounds of public money was spent when Royal Bank of Scotland and Lloyds Banking Group needed bailing out by the Government at the height of the financial crisis in 2008. RBS is now 82 per cent state owned while 40 per cent of Lloyds is in public ownership.

Northern Rock’s business model was heavily dependent on wholesale funding markets and when liquidity dried up in 2007, its customers withdrew billions of pounds in the first run on a bank for over a century. Eventually the bank was nationalised in February 2008.


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There are 5 comments at the moment, we would love to hear your opinion too.

  1. I am no lover of what the FSA has done to our profession but at last this may make future Fred the Shred’s think twice before they act with perceived impunuity. Next they need to ensure that personal fines are much more easily available to be imposed on the same people that they ban in the same way that they do for IFA’s who blatently cause client harm. Its just a pity that when Sants took over he didnt make this a priorty. By his own admission he and the FSA were owerless to act against RBS over the Amro purchase even though “the FSA had serious miss-givings about the risk this imposed”. AS they are very good at imposing retrospective changes they should persue these bafoons with fines in the future for stuff they did in the past.

  2. Will the same apply to failed regulators?

    BTW, what is persue and what are bafoons?

    Do the mandatory RDR qualifications include a basic grasp of the English language?

  3. That’s fine as long as failed FSA personnel then can’t get jobs at the Banks.
    Oh look another flying pig!!!

  4. How about the former Director of Risk from RBS (who caused much of the mahem) now in charge at Virgin Money ?

  5. Beware of what you wish for.
    The report says “to make it easier to refuse an approved persons application”. Not possible, but easier. If such rules come into play that it is highly likely that they will apply to everyone.
    As we all know the Rule of Law is unknown in Canary Land. Just because you are mildly irritated at bankers (that is the right phrase?) do not support action that can have repercussions lower down the pecking order.
    Any change in approved person regulation should be matched by facilities for appeal, and for transparency of process.
    And be careful that draconian regulation does not encourage banks to move their domicile offshore. For the moment we certainly need the employment they provide

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