Mirror 13:43, 14 Dec 2015 Updated 16:43, 14 Dec 2015 BY Dan Bloom
The Tories have quietly scrapped a crackdown on fatcat bank bosses
Going easy on the bankers: George Osborne
The Tories have quietly dropped a crackdown on fatcat bosses who preside over reckless behaviour in Britain’s banks.
Labour and Lib Dem peers voiced their fury today after the move was slipped without fanfare into an obscure section of a new banking law.
Lib Dem Baroness Kramer accused “outrageous” George Osborne of “buckling to pressure from his friends in the banks” – and warned it could allow bosses to turn a blind eye to another LIBOR rate-rigging scandal.
The ex-MP told the Mirror: “People are no longer talking about the banks so the Tories think they can go easy on them.
“The government claims the rule will make it hard to hire good people. They’ve obviously been in conversation with the banks to come up with statements like that.”
The law being axed could have found bank chiefs guilty of misconduct even if a watchdog had no proof they broke the rules.
Worry: Regulators will now have to devote extra cash to finding reams of evidence
It said managers should be held to account for all rule-breaking by their employees – and would only escape punishment if they proved they had done all they could to stop it.
But the law, passed by MPs in 2013, is now being repealed just weeks before it was due to come into force in March.
Instead of bank bosses having to prove they did enough to stop rule-breaking, regulators will now have to prove they did not.
That will shift the ‘burden of proof’ from bankers themselves to organisations like the Financial Conduct Authority, making it more expensive to pursue high-salaried bosses.
Baroness Kramer added: “The rule would have forced senior management to lay down a paper trail. But they haven’t even tried it.
“It beggars belief that the government is planning to water down rules to hold top bankers to account.
“It is as if they have already forgotten about the 2008 crash, Libor fixing or any one of the other scandals that cost the taxpayer billions.
“Senior managers in our banks should not be allowed to wash their hands of failings. Ignorance is not an excuse when our economy and British livelihoods are on the line.”
The U-turn is being moved in the small print of the 60-page Bank of England Bill and will be challenged tomorrow in the House of Lords.
Labour shadow Treasury ministers Lord Tunnicliffe and Lord Davies will join Lib Dem Baroness Kramer to try and stop the change.
Also signing the amendment is former Treasury select committee chairman and Labour peer Lord McFall.
Despite Labour and the Lib Dems outnumbering Tories in the Lords, it is not known yet if the amendment will pass. It s understood Labour Lords whips are still deciding whether to force peers to vote the same way.
A Treasury spokesman said: “The government has taken concerted action to improve conduct across the banking sector and deal with the abuses and unacceptable behaviour of the past.
“We’ve introduced the toughest rules on bankers’ pay of any major financial centre, and hardwired responsibility and accountability into the financial system, with those senior managers responsible for bringing down banks facing up to seven years in prison.
“We are extending the Senior Managers & Certification regime so that tough standards of personal responsibility and accountability apply beyond banking and across the entire financial services industry.
“This will ensure that all financial services firms in Britain operate to the highest standards.”