With effect from Monday 8th March a new regulatory regime came into force which holds top executives responsible for failures in banks. There is even a new criminal offence ‘of failure to prevent a bank collapse’. That said the scheme has been watered down since it was first proposed, which is in line with the Government’s (stoutly denied) policy of easing off on banks. George said ‘The new criminal offence is the latest milestone in my plan that the British banking industry operates to the highest possible standards. It is absolutely right that senior managers whose actions cause their bank to fail should face jail.’ The ‘watering down’ involves the burden of proof required for a finding of wrong doing by a senior manager. Initially it had been envisaged that the new regime would require managers to demonstrate that they had done the right thing throughout any banking failure, in the same way that IFAs have always had to. But that has been changed so that the burden of proof now falls on the FCA, requiring the regulator to actively prove wrong doing by the bankers, who are otherwise presumed to have acted correctly. Wouldn’t a level playing field be nice? No breath holding!
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