FSA chairman Lord Turner sparks debate on tougher punishments for bailout bankers
Tuesday 13 December 2011
Lord Turner, the chairman of the Financial Services Authority (FSA), wants to start a national debate on imposing more punitive measures against bank executives and directors in any future collapse or bailout.
"People want to know why RBS [Royal Bank of Scotland] failed and why no one has been punished," Lord Turner said.
He admitted that the FSA had been "seriously flawed" but claimed it was "very different now."
"The fact that no individual has been found legally responsible for the failure begs the question: if action cannot be taken under existing rules, should not the rules be changed for the future?"
He suggested two ways of doing this:
l a "strict liability" approach, making it more likely a bank failure like RBS's would be followed by successful enforcement actions, including fines and bans;
l an automatic incentives-based approach involving either rules which automatically ban senior executives and directors of failed banks from future positions of responsibility, or major changes to remuneration to ensure a significant proportion of pay is deferred and forfeited in the event of failure.
Lord Turner said: "There are important pros and cons of these different ways forward, and complex and important legal issues which would need to be considered. But by one means or another, there is a strong argument for new rules which ensure that bank executives and boards place greater weight on avoiding failure."
But he cautioned that if new rules went too far "no sane person would ever consider sitting on the board of a bank".
He promised a consultation paper in the new year.
The FSA has been widely criticised because of its failure to take action against all but one of RBS's former directors, including its chief executive, Sir Fred Goodwin.
Lord Turner accepted the report's criticism of the regulator: "The FSA had developed a philosophy and approach to the supervision of high-impact firms, and in particular major banks, which resulted in insufficient challenge to RBS's poor decisions. The FSA's approach reflected widely-held but mistaken assumptions about the stability of financial systems and responded to political pressures for a 'light touch' regulatory regime."
- 1 Paris attacks: Do not call Charlie Hebdo killers 'terrorists', BBC says
- 2 Man who held up 'hire me' sign at Waterloo station returns a year later with 'I'm hiring' sign
- 5 The enemy within: People who hear voices in their heads are being encouraged to talk back
Paris attacks: Do not call Charlie Hebdo killers 'terrorists', BBC says
Rowan Atkinson to sell £10 million McLaren 'supercar' he crashed into a tree and a lamppost
UK weather: Snow to fall in the coming week with sub-zero temperatures to last until early February
Saudi preacher who 'raped and tortured' his five -year-old daughter to death is released after paying 'blood money'
Howard 'Mr Nice' Marks reveals he has inoperable cancer: 'I've had an incredible life'
Nigel Farage: NHS might have to be replaced by private health insurance
'We would evict Queen from Buckingham Palace and allocate her council house,' say Greens
French court convicts three over homophobic tweets, in case hailed as a 'significant victory' by LGBT rights campaigners
Greece elections: Syriza and EU on collision course after election win for left-wing party
George Galloway condemns 'racist, Islamophobic, hypocritical rag' Charlie Hebdo at freedom of speech rally
British Muslim school children suffering a backlash of abuse following Paris attacks
iJobs Money & Business
£30000 - £32000 per annum + benefits : Ashdown Group: A highly successful, int...
£18000 - £20000 per annum: Recruitment Genius: This rapidly expanding business...
£25 - 28k + Bonus: Guru Careers: An In-house / Internal Recruiter is needed to...
Negotiable: Recruitment Genius: A Tax Assistant is required to join a leading ...