How to Make Bankers Accountable for their Actions

 Sanderson's Head of Finance, Tim Donaghy, comments on the Parliamentary Commission of Banking Standards' latest report and whether it will make bankers liable for their negligence.

The cross-party Parliamentary Commission on Banking Standards' fifth reports proposes that bankers are held accountable for their actions in the future, and threatens imprisonment for those guilty of 'reckless misconduct'. The report highlights that, despite numerous scandals being illuminated in recent years, senior level bankers have not been punished for turning a blind eye on their responsibilities.

The report advocates that senior bankers should be assigned clear personal responsibilities, with the legal onus on them to show they have done all that is reasonably required; recklessly disregarding their responsibilities should be a made a criminal offence; senior bankers should adhere to a new set of banking standards set by regulators; bonus pay should be deferred for up to 10 years and cancelled if a banker acts irresponsibly and banks should be legally required to put financial safety ahead of shareholder interest. 

These measures are without doubt a step in the right direction, however, it puzzles me as to why five reports on this subject have been made already, yet this is the first time a notion is being mooted! I recently attended an RSG Debates event based around the question of whether businesses can self-regulate. An interesting point was made during the course of the evening; a blue collar worker can be imprisoned for stealing £100 out of the petty cash tin, yet a CEO receives a £1m a year pension after overseeing the complete demise of a bank (RBS and Goodwin). The magnitude of the injustice of this double standard is incomprehensible and, as the report points out, for too long bankers have fallen back on the claim that everyone was party to a decision, therefore, no individual could be held accountable. 

It is about time that the high earning executives who we entrust with our money should be made liable if they are found to be negligent. Perhaps the promise of imprisonment, rather than bonus schemes, will incentivise them to be more responsible in the future?