Financial News

  • 13 June 2013, 9:57

Panel Rejects Legal Powers For New Bank Body

A powerful committee of MPs and peers is expected to distance itself from proposals to establish a professional banking standards body with legal powers following its 10-month inquiry into the sector's culture.

Sky News understands that the Parliamentary Commission on Banking Standards (PCBS) is expected to conclude in its forthcoming final report that a new professional standards body overseeing bankers' training and professional conduct could offer a means to improving banking standards.

However, it is also expected to say that such a body does not require a legal basis and that formal powers should remain with the industry regulator, the Financial Conduct Authority.

The potential decision by the PCBS not to formally recommend the creation of a professional standards body follows submissions by a number of parties to the inquiry recommending that the sector would regain public credibility if its training and standards were overseen by such an organisation.

The British Bankers' Association (BBA) proposed in January a range of options including a new Banking Standards Review Council, "responsible for ensuring that banks and their employees adhere to a Code [which] would need to cover expectations on company boards, senior management, controls, systems and remuneration structures".

Another option, the BBA said, would be for "a blacklist of employees be developed with the aim of preventing individuals from working in either banking or the wider financial services sector".

News of the trajectory of the commission's thinking about a banking standards body comes as its members finalise their full report.

Sky News revealed on Wednesday morning that the chief executives of the major UK banks were in talks about forming a working group to respond to the elements of the PCBS report relating to standards, ethics and culture in the industry.

According to people close to the discussions, which are not yet finalised, the bosses of Barclays, HSBC, Lloyds Banking Group, Royal Bank of Scotland, Santander UK and Standard Chartered are planning to bypass their industry lobbying group to submit their own response.

The reason for the likely move was that the BBA's responsibility to all of its members was likely to conflict with the response of the biggest high street banks, which have become embroiled in a string of mis-selling and market manipulation scandals, according to one insider.

The BBA would still present a response to the full PCBS report, the source added.

Among the key recommendations of the PCBS will be measures to bolster competition and clamp down on pay practices that it will say were responsible for fomenting a corrupt culture in British banking.

The BBA declined to comment.