LONDON Dec 16 Britain ushered in a new era of
banking industry oversight on Monday when lawmakers gave their
final approval to reforms aimed at tackling the structural and
cultural failings which led to the near-collapse of the
country's financial sector.
The reforms are the result of a lengthy legislative process
started after the 2007/8 financial crisis and a series of
mis-selling and rate-fixing scandals which shone a light on
illegal and unethical behaviour at some of Britain's banks.
Among the main features of the bill are rules to force banks
to separate their retail and investment activities and a new
regime to make senior bankers more accountable - including
criminal sanctions if their institution fails.
"This is a major milestone and marks the end of a three-year
process, led by the government, to make the UK banking system
stronger and safer so that it can support the economy, help
businesses and serve consumers," said Sajid Javid, the minister
in charge of the bill.
Javid said the new laws would help improve bankers'
standards of conduct, generate extra competition in the industry
and prevent British taxpayers from footing the bill for any
future bank failures.
The bill also introduces new rules to make sure bankers'
bonuses are paid over a longer term, to stamp out excessive
The final stage of the legislative process came in the upper
house of parliament late on Monday night when senior lawmakers
agreed on the technical details of a regime to certify senior
The package is expected to receive a rubber stamp approval
from Queen Elizabeth and become law later this week.
"The Bill is a significant step in facilitating a new
dynamic," said Paul Garbutt, head of UK Financial Regulation at
accountants Grant Thornton. However, he said the onus was now on
the banks themselves to make sure the laws made a difference.
The driving force behind the legislation was a cross-party
commission on banking standards, set up by the government in the
wake of the Libor rate-fixing scandal.
Based on evidence from regulators and many of London's top
bankers, the commission produced five reports, culminating in a
500-page set of recommendations released in June.
"We have had this crisis. The horse has bolted, what we have
got to do now is devise a stable door that can keep the next
horse in," said Andrew Tyrie, chairman of the Parliamentary
Commission on Banking Standards, speaking in parliament last
The commission put heavy pressure on the government to adopt
its proposed reforms as a whole, and was able to extract
concessions on several major issues even after the government
was reluctant on some measures.
Last month finance minister George Osborne asked the Bank of
England to decide whether it needed more powers to control
banks' risk taking - moving towards a major recommendation from
the banking commission which had initially been