Lambert Hints At Shape Of Bank Standards Body
Individual bankers are unlikely to be the subject of new professional standards rules being drawn up under a new regime aimed at shedding the legacy of recent industry scandals, according to the former head of the CBI.
Sir Richard Lambert, who was appointed earlier this year to build a new standards body for the sector, said the size and diversity of British banking meant that registering bank employees "might require the creation of a substantial new institution".
While not ruling out the option, the comment suggests that Sir Richard is likely to favour a system under which the major banks themselves are members of the new body rather than individual employees.
Such an approach could clash with that of the Government, which tabled amendments to its Banking Reform Bill in the House of Commons on Monday requiring banks to conduct annual "health-checks" on their senior staff to ensure that they retain their ability to operate.
Sir Richard, a former Financial Times editor, said on a website established to canvas the views of banking industry stakeholders that other financial services companies, such as insurance companies, hedge funds and so-called shadow banks should not fall under the remit of the new body.
Among the key issues that he will have to resolve will be the efficacy of the new body's relationship with banking industry regulators, he said.
"There must be no risks of double jeopardy, or of unnecessary red tape. But if it doesn't have disciplinary powers, how will it exercise authority?"
The new body, which is expected to be launched next year, may "have a relatively small board that would take in people from the banks' different stakeholder groups - consumers, employees, small businesses, investors and the like, as well as a minority of bankers", Sir Richard said.
He added that the independence of the body would also be crucial, but posed the question of how it would be guaranteed given that it would be funded by the banking sector.
Impetus for the creation of the professional standards organisation was provided by the Parliamentary Commission on Banking Standards (PCBS), which said in June that such a body would demonstrate that "a commitment to high standards is expected throughout banking and that individuals are expected to abide by higher standards than those that can be enforced through regulation alone".
The Commission was established in the wake of Barclays' fine for rigging the Libor benchmark rate in the summer of last year.
Since then, the Co-operative Bank has seen its reputation tainted by revelations about its former chairman, Paul Flowers, regulators have opened an inquiry into potential manipulation of foreign exchange markets, and British lenders have set aside billions of pounds more for product mis-selling compensation.
The PCBS, which was chaired by the Conservative MP Andrew Tyrie, insisted that any new body "must never allow itself to become a cosy sinecure for retired bank chairmen and City grandees. Just as importantly, it must eschew from the outset and by dint of its constitution any role in advocacy for the interests of banks individually or collectively."
Mr Tyrie also argued that the new body should seek to encompass every bank with operations in the UK, warning that if any were to shun the move to improve professional standards, it would damage the effectiveness of the initiative.
:: Watch Sky News live on television, on Sky channel 501, Virgin Media channel 602, Freeview channel 82 and Freesat channel 202.