View more on these topics

MP bids to hold directors to account for losses

All-party Parliamentary group on economics, money and banking chair Steve Baker wants directors of financial institutions to be forced to take personal liability for their firms’ losses.

In a private member’s bill to be debated later this month, Conservative MP Baker calls for any losses to be “made good” first by directors’ bonuses which should be held back for five years, and then by personal bonds worth £2m or half of the director’s net wealth.

He says if this is not enough to cover losses, directors should be required to put more money into the bank or be declared bankrupt.

Baker says: “With key decision-makers’ wealth at risk, they could be expected to take responsible decisions instead of expecting rewards for failure.”

Lloyds Banking Group used powers to claw back bonuses for the first time this week when it stripped senior staff of £2m-worth of share bonuses over payment protection insurance misselling.

Baker says: “Bankers should bear their own risks and there should never be another taxpayer bailout of a bank. My bill would achieve those aims.”



FSA says no evidence of investment bond bias

The FSA says it has seen no evidence of a bias towards recommending products such as investment bonds which would justify a ban on trail commission continuing to be paid on fund switches within a life product. The regulator has published a policy statement on the treatment of legacy assets today following a consultation paper […]


FSA UK banking head steps down

FSA head of large complex UK banks Mandy Spink has decided to leave the regulator. Money Marketing understands Spink is stepping down at the FSA to join consultancy Promontory, which focuses on regulatory advice. Spink has been at the FSA since it was created in 1997, and has 20 years experience in financial services regulation. […]

Insurers to add jobs to own-occupation cover

Ageas Protect, Aviva and LV= say they will look to include more job classes in their own-occupation definition for income protection customers by the end of the year. Ageas Protect head of marketing Andy Milburn says the firm will review its IP strategy and will look to place more job classes under the own-occupation definition.Aviva […]

Broker hit with penalty for disclosing inside information

The FSA has fined a former Merrill Lynch International corporate broker £350,000 for disclosing inside information ahead of a £375m equity fund-raising by Punch Taverns. Ex-managing director in corporate broking Andrew Osborne acted on behalf of Punch and approached major shareholder Greenlight Capital. On June 9, 2009, Osborne held a conference call between Punch management […]

Tax-free gains? That can’t be right, can it?

When he was Chancellor of the Exchequer, George Osborne made several changes to the way in which income is taxed. Personal allowances were increased significantly above the rate of inflation; a starting rate band was introduced for savings income and, with effect from 6 April 2015, this was assessed at 0 per cent. In addition, […]


News and expert analysis straight to your inbox

Sign up


There are 4 comments at the moment, we would love to hear your opinion too.

  1. Now there is a novel idea. Imagine bankers actually having to do this? Nice thinking but wont work unless it happens globally. If it is only in the UK, they will clear off to parts foreign where they wont have to put their own necks on the line. Good luck with it anyway Mr Baker.

  2. How about making FSA directors personally responsible for the consequences of regulatory failures instead of allowing them to foist the costs onto the industry? Accountability (sorry, we’ll try to do better next time) without liability (but whichever way it goes, it won’t cost us anything) is worthless.

  3. Come on, this is a foolish knee jerk reaction. No-one in their right mind would accept a Directorship under these rules. Baby would go out with the bath water.

    I’ve read that RBS is to freeze pay of 10,000 highest earners: no doubt an attempt to defuse public anger but the bank is still paying some bonus to them, according to the ADVFN article, even though it lost £2 billion in 2011.

    I don’t accept the argument that “we’ll lose them if we don’t pay.” As a shareholder (I bought at a very low price), my view is that the team that lost £2 billion isn’t going to receive any bonus and they’d probably be facing the sack.

  4. It is an excellent idea. @Richard Brown. People would accept directorships under these terms since these are the terms upon which partnerships are arranged. Lloyds names also have personal liability of this kind. Look back in history and you’ll see that this was a normal way of doing business. The point is that the rewards for any bank CEO are great enough to justify the personal liability currently. Most ambitious, talented people with half a clue about banking would be keen to do such a job, and would back themselves not to send the business bust. The key is that it would make such individuals more cautious, and it is a far cheaper and more effective method of ensuring a more conservative banking sector than ‘macroprudential’ rules/quotas/checking etc.

Leave a comment


Why register with Money Marketing ?

Providing trusted insight for professional advisers.  Since 1985 Money Marketing has helped promote and analyse the financial adviser community in the UK and continues to be the trusted industry brand for independent insight and advice.

News & analysis delivered directly to your inbox
Register today to receive our range of news alerts including daily and weekly briefings

Money Marketing Events
Be the first to hear about our industry leading conferences, awards, roundtables and more.

Research and insight
Take part in and see the results of Money Marketing's flagship investigations into industry trends.

Have your say
Only registered users can post comments. As the voice of the adviser community, our content generates robust debate. Sign up today and make your voice heard.

Register now

Having problems?

Contact us on +44 (0)20 7292 3712

Lines are open Monday to Friday 9:00am -5.00pm