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Govt moves closer to criminal sanctions for ‘reckless’ bankers

The Government has moved closer to introducing criminal sanctions for “reckless” bankers as part of reforms to overhaul the banking system.

A total of 86 amendments has been published on the banking reform bill ahead of scrutiny of the bill in the House of Lords next week.

The banking reform bill largely adopts a raft of recommendations put forward by the parliamentary commission on banking standards in June, which was set up in the wake of revelations about Libor rigging last year.

These include the introduction of a criminal sanction for “reckless misconduct that leads to the failure of a bank”, and a tougher approval regime for senior bankers.

Treasury select committee chairman Andrew Tyrie, who also chaired the commission on banking standards, said in October last year that bankers guilty of wrongdoing should be put in “orange jump suits” to act as a deterrent to others.

The Government has also included an amendment to “electrify” the ringfence separating banks’ retail divisions from their investment operations, which would give the Government reserve powers to implement full separation of retail and investment arms.

The Treasury says: “We are determined the Government’s reforms to the banking sector deliver a stronger and safer financial system that supports the British economy, businesses and consumers.

“These amendments mark the final part of the Government’s plan for the biggest ever overhaul of the UK banking system. Already we have put the Bank of England back at the centre of prudential supervision and now, through the banking reform bill, we are delivering on our promise to increase competition, drive up standards and increase financial stability.”

The banking reform bill is due to receive royal assent by early 2014.  

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