Bosses of failed or scandal-hit banks no longer 'guilty until proven innocent' as industry lobbying forces Treasury U-turn
Victory for bank bosses: The treasury has been pressured into dropping the 'burden of proof' rule
Tough rules designed to hold top bankers to account for scandals have been watered down by the Government after lobbying by the banking industry.
In a U-turn, the Treasury has dropped the ‘guilty until proven innocent’ rule for bosses of failed banks or those who have presided over a major mis-selling scandal.
A key part of the Senior Managers Regime was that bank executives would have to prove to regulators they took all reasonable steps to prevent wrongdoing or reckless behaviour which may have led to the collapse of a firm.
Those who failed to prove their innocence would face unlimited fines or lifetime bans from running a company. Bosses of failed banks could even face a jail sentence of seven years for reckless behaviour.
But the ‘reverse burden of proof’ rule was highly controversial as it turned the cornerstone of the UK justice system – innocent until proven guilty – on its head.
Now senior managers across the financial sector will have a statutory duty to take all appropriate steps to prevent a regulatory breach from occurring.
But it will be up to the Bank of England’s Prudential Regulation Authority or the Financial Conduct Authority to prove that a senior executive did not take appropriate action.
The ‘regime’ will be introduced for banks and building societies next March, before being extended across the financial industry two years later.
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