Regulator warns banks over risks
Banks could see bonuses cut, dividends limited or lending levels restricted if their activities are considered too risky, the head of their new regulatory body, the Prudential Regulatory Authority, said today.
Hector Sants, who will lead the PRA, promised the new body will be tougher and more intrusive than current regulator, the FSA, and make its own judgments on the risks posed by a bank's activities.
The "central presumption" is that regulators cannot rely on what banks tell them and must carry out their own analysis, he said in a speech in London. Being focused just on financial stability will also help it avoid some of the mistakes made in the run-up to the credit crunch, he added.
In extreme cases, the new approach could mean a bank being forced to stop trading and wind itself down if the situation is deemed serious enough,
The former banker is currently chief executive of the FSA, but that organisation is being abolished and he will move over to run the PRA under the new regulatory regime coming into force next year.
In an attempt to avoid a repeat of the crisis that prompted taxpayer-funded bail-outs of Northern Rock, Royal Bank of Scotland and Lloyds Banking, the overseeing of the UK financial markets will now be handled by two bodies.
The PRA will deal with financial stability while the Financial Conducts Authority will handle markets and consumer protection.
Mr Sants said one of the failings of the FSA was that it never had the full support of parliament or the public.
To help avoid this happening again, the new body, which will be responsible for 2,000 financial companies, will be fully accountable and have the power to publish reports on failed firms.
The FSA caused uproar last year when it refused to publish a full report on why Royal Bank of Scotland had to be rescued, instead stating the conclusions in a one-page press release.
Diving in at the deep end is no excuse for shirking the style stakes
- 2 Why I'm on the brink of burning my Israeli passport
- 4 War is war: Why I stand with Israel
- 5 Blackest is the new black: Scientists have developed a material so dark that you can't see it...
Ian Thorpe gay: Olympic swimmer comes out in Parkinson interview
Stephen Fry ‘criticises Operation Yewtree in dinner party rant’ calling for tougher laws to deter false sex abuse allegations
Israel-Gaza conflict: ‘Sderot cinema’ image shows Israelis with popcorn and chairs 'cheering as missiles strike Palestinian targets'
Israel-Gaza conflict: Israeli air strike destroys home for the disabled killing two women residents
Israel-Gaza conflict: Israeli PM says conflict may 'continue for a long time' as hundreds of Palestinians flee their homes
Sustained immigration has not harmed Britons' employment, say government advisers
War is war: Why I stand with Israel
Even when it brutalises one of its own teenage citizens, America is helpless against Israel
Socialist Worker called to apologise over ‘vile’ article saying Eton schoolboy Horatio Chapple's death is ‘reason to save the polar bears’
Emergency data law: David Cameron plots to bring back snoopers’ charter
NUT strike: David Cameron announces crackdown on strike action ahead of mass industrial action
£40000 - £60000 per annum + Benefits + Bonus: Harrington Starr: Dynamics CRM D...
£40000 - £45000 per annum + Benefits + Bonus: Harrington Starr: Web Developer ...
£50000 - £67000 per annum + Benefits + Bonus: Harrington Starr: C# R&D .NE...
£40000 - £50000 per annum + Benefits + Bonus: Harrington Starr: C# Developer (...