PARIS: New rules being rolled out to make bankers more accountable were “entirely reasonable” given the pain Britain suffered in the financial crisis, HSBC Chairman Douglas Flint said.
The new “senior managers’ regime” will make top bankers directly accountable for rule breaches on their patch from 2016, but it has been criticised by some bankers and financial lawyers for going too far and hard to apply in practice.
The rules reverse the “burden of proof”, meaning that bankers will have to demonstrate they took reasonable steps to stop rule-breaking otherwise they would be presumed to be responsible for the breaches.
Bankers could also be jailed if their reckless behaviour resulted in the bank going under, though this specific charge would have to meet the usual threshold of proof in a court.
It was included after lawmakers were frustrated that no bankers were jailed after UK taxpayers had to shore up a string of lenders in the 2007-09 financial crisis.
It’s reasonable given the pain that has been suffered in the last financial crisis that the public feel that in those very narrow circumstances there is redress under the law,” Flint said.
Some banks have said the rules could impair London’s ability to compete with rival financial centres.
We are, if you like, doing impact studies as we go at the moment and it will settle down, but the direction of travel is right,” Flint said.
He wanted to see a regulatory regime that is seen as the fairest and most robust.Martin Wheatley, chief executive of the Financial Conduct Authority, a watchdog that will implement the new regime, told the same event it was “not that complex”.
He said it was simply a matter of having an organigramme showing who is a line manager for whom at a bank, something some lenders had not been able to do.
It’s common sense and we shouldn’t try to over engineer it when we get to implement it,” Wheatley said.
He said the new regime was part of efforts to draw a line under misconduct in financial services so that people can say they are proud to work in banking.
“We want to get back to the situation frankly where all of you can hold your heads high, and when you are at parties with people other than those in this room can say ‘yes, I do work in financial services’,” Wheatley said.
