A GOVERNMENT bill designed to get tough on bankers is being watered down as a key ruling on ensuring accountability for senior managers is scrapped.
Chancellor George Osborne has been criticised by the Labour Party for pandering to bankers demands by removing a key tenant of the Bank of England and Financial Services Bill, and for failing to make the Financial Conduct Authority re-start its ditched review into the UK’s banking culture.
However the Treasury claims senior managers will not be able to ‘side-step’ responsibility in the future and the Government has taken action to make sure that unacceptable behaviour doesn’t happen again.
Shadow City Minister Richard Burgon, and former Shadow Secretary of State for Work and Pensions, Rachel Reeves, said the Bill is being severely watered down by ending the ‘reverse burden of proof’ which was agreed by both Conservatives and Labour in 2011.
Mr Burgon, MP for Leeds East, said managers will no longer have to prove that they took reasonable steps to prevent misconduct, and criticised the decision to change this particular section of the Bill before it had even been enacted.
He believes the banking industry has pressured the Chancellor by explaining the Bill will make it harder to attract people to top finance jobs.
During a debate in the House of Commons, he said: “This Bill removes that onus on senior bankers. The onus is entirely reasonable, proportionate and, as bitter experience tells the
British people, entirely necessary. Misconduct and misdemeanours in financial services are not merely a tale from history.”
Ms Reeves, who worked for the Bank of England before entering into politics as Labour's Leeds West MP, said: “The Government toughened up the legislation but now they are watering it down and that’s not good enough. They are going back on promises that they made.”
She is also critical that a Financial Conduct Authority dropped its review into the country's banking culture as it would have offered 'important insight' into the industry.
The Treasury said it has introduced its Duty of Responsibility code to drive up standards and is confident that managers can be held to account for failings on their watch.
A spokesperson said: “The Duty of Responsibility will embed a new culture of accountability, ensuring that senior managers will not be able to sidestep their responsibilities when something goes wrong. Crucially, ignorance will not be a defence.
“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 hard-wired responsibility and accountability into the financial system, with those senior managers responsible for bringing down banks facing up to seven years in prison."