UK: Government consultation 'Sanctions for the directors of failed banks'

HM Treasury yesterday published a consultation paper titled Sanctions for the directors of failed banks: see here (pdf). Views are sought on two proposals: [1] the introduction of a rebuttable presumption that the director of a failed bank would not be suitable for approval by the regulator to hold a senior executive position in a bank; [2] the introduction of a new criminal offence for serious misconduct, based on recklessness, in the management of a bank. The consultation paper rejects the introduction of strict liability offences.

The first proposal, if adopted, would be included in the Financial Services Bill currently before Parliament. The Government is less clear about how the second proposal, if adopted, would be introduced. Elsewhere in the paper several suggestions are made for the FSA (and its successors) to consider, including providing greater clarity with regard to regulatory and management responsibilities.