Labour seeks to amend Banking Bill to introduce new criminal offence of “reckless misconduct in banking”

Labour has tabled a series of amendments to the Banking Bill – including on deferring bonuses and a new criminal offence of reckless misconduct in banking. As RBS’s value tumbles, Labour has also tabled an amendment which would require the Treasury to publish – in advance of disposing of any of the government’s stakes in the part-nationalised banks – a report on how the best interests of the taxpayer will be protected and on the expected impact that any sale might have on competition, customer choice and the wider economy. Announcing the amendments, Ed Balls said:

“David Cameron promised to amend the banking reform Bill to implement the Parliamentary Commission’s report, including its recommendations on deferring bonuses and criminal penalties for reckless misconduct. But for all the tough talk, he and George Osborne have totally failed to do so.”

“The Conservatives are ducking the radical reforms we need and which the cross-party commission has called for, so Labour has tabled a series of amendments to this Bill.”

Here are Labour’s amendments:

• REVIEWS OF THE RING-FENCING RULES – based on an amendment drawn up by the Parliamentary Commission but with reviews of the ring-fence brought forward to every two rather than every five years.
• FULL SEPARATION RESERVE POWER – a full separation reserve power to split banks into retail and investment arms, as has been repeatedly called for by Ed Miliband and Ed Balls as well as the Parliamentary Commission.
• PROFESSIONAL STANDARDS – this is similar to the amendment tabled by Labour at Committee Stage, which called for the licensing of bankers, but it has been updated to reflect the recommendations made in the final report by the Parliamentary Commission.
• DUTY OF CARE – this was also tabled at Committee Stage and would impose on ring-fenced banks a duty to operate prudently and to safeguard deposits, and a duty of care to customers across all financial services.
• REMUNERATION – the regulator should have the power to require elements of remuneration to be deferred for up to 10 years. This was also tabled by Labour at Committee Stage and has been re-tabled in light of the fact the Parliamentary Commission took a very similar view in its final report.
• REVIEW INTO SETTING UP A FINANCIAL SERVICES CRIME UNIT in the SFO – this is similar to a Clause tabled by Labour at Committee Stage and follows one of the key recommendations made by Ed Miliband in his speech on banking last year.
• WHISTLEBLOWER PROTECTIONS – this would mean a worker cannot be dismissed if they blow the whistle on misconduct. If they are, they can claim unfair dismissal – and they will be protected by law as long as certain criteria are met.
• BANK ACCOUNT PORTABILITY – this aims to boost competition by making the Treasury report on how to make it easier to switch bank accounts. It would also cover possible changes in the law to facilitate switching and give the regulator powers to enforce any account switching scheme.
• REVIEW INTO COMPETITIVENESS – Competition and Markets Authority to immediately begin a full market study of competition in the retail and SME banking sectors, as recommended by the Parliamentary Commission.
• LEVERAGE RATIO TARGET – the Treasury would set a target for the leverage ratio which would be supervised by the FPC. The amendment also reflects the need to ensure banks do not shrink lending.
• SALE OF STATE-OWNED BANKING ASSETS – ensure that before the privatisation of RBS and Lloyds the Treasury publishes a report into how the best interests of the taxpayer will be protected.
• RECKLESS MISCONDUCT IN THE MANAGEMENT OF A BANK – following the recommendation by the Parliamentary Commission, the Treasury would bring forward proposals to cover a new offence of “reckless misconduct”.