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UK backs proposals to shake up banking standards

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(Globalpost/GlobalPost)

LONDON (Reuters) - Britain will adopt a raft of proposals aimed at raising standards at banks following a string of scandals, including the threat of prison for reckless bosses and greater scope to claw back bonuses and pensions.

Finance minister George Osborne said on Monday he would implement the main proposals set out by a committee of lawmakers last month, which also include new rules to better monitor bankers' behavior.

The committee's key proposals will be added to the banking reform bill currently in parliament.

"Cultural reform in the banking sector marks the next step in the government's plan to move the whole sector from rescue to recovery and ensure that UK banks demonstrate the highest standards, and are able to support business and drive economic growth," Osborne said in a statement.

Osborne said he would work with regulators to better align bankers' pay with their performance, which could allow bonuses to be deferred for up to ten years and allow all of a bonus to be clawed back when a bank receives taxpayer help.

Britain's Parliamentary Commission on Banking Standards (PCBS) was set up last year after Barclays <BARC.L> was fined for rigging interest rate benchmarks.

Many Britons blame bankers' risk-taking for the 2008 financial crisis and subsequent economic slump, and their anger was further fueled by bumper pension pots for failed executives, fines from regulators for most of the top banks, and a mis-selling scandal on millions of insurance products.

Osborne said he aims to increase choice in the industry by giving the Prudential Regulation Authority (PRA), the new industry watchdog at the Bank of England, a secondary objective to improve competition, and by asking a new payments regulator to study how easy it is to switch accounts and consider if big banks should give up ownership of the payments systems.

Corporate governance will also be improved to ensure firms have the correct systems in place to identify risks and maintain standards on ethics and culture, Osborne said.

(Reporting by Steve Slater; Editing by Sinead Cruise and Mark Potter)

http://www.globalpost.com/dispatch/news/thomson-reuters/130708/uk-backs-proposals-shake-banking-standards