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Should directors of failed banks be banned?

The Government has launched a consultation into whether or not the directors of failed banks should be banned from taking similar jobs in future.

The consultation also asks whether criminal sanctions should be introduced for serious misconduct in the management of a bank.

Under current rules it is for the regulator to prove an individual is not fit to hold an executive position in a bank. 

The Government’s proposals means when a bank fails, there will be a “rebuttable presumption” its directors should not hold a similar position in another financial institution, unless they can prove they had no responsibility for the failure of the bank and that they acted properly.

Treasury financial secretary Mark Hoban says: “Today’s proposals are some of the most ambitious in Europe and will make it easier for the regulator to stop directors of failed banks from taking up similar positions in the future. 

“Because of the serious consequences that a bank failure can have on the economy and taxpayers, we are also consulting on whether to extend the criminal law to cover serious misconduct in bank management.”

The findings of the consultation on banning directors from similar jobs will be considered for inclusion in the Financial Services Bill, currently in the House of Lords. Any finding on criminal sanctions for bankers will be introduced through new legislation


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There are 2 comments at the moment, we would love to hear your opinion too.

  1. Simon Mansell 3rd July 2012 at 7:36 pm

    Should directors of failed banks be banned from taking similar jobs in future? Give me a break! Lets apply this to failed regulators! There’s plenty of those in top postions after leaving the FSA. Hey they even awarded themslves a £20m bonus for their 2008 failure!

  2. Julian Stevens 3rd July 2012 at 7:57 pm

    It depends how you define ‘failed’. Any director or manager who is found either to have directed or to have been complicit in or to have known about but failed to take steps to put a stop to activities that constituted breaking the Law is as guilty of those activities as those who actually perpetrated them. Isn’t that the way the Law’s supposed to work?

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