Chancellor George Osborne has been accused of pandering to banks and watering down key proposals designed to make the banking system safer.
Observers from the House of Lords, where the Banking Reform bill is currently being processed, have said that important proposals relating to the ‘ring-fencing’ between retail and investment banks had been “neutered”.
Lord McFall, former chairman of the Commons Treasury Committee, accused ministers of taking power away from the regulator and placing it back into the hands of politicians.
If banks are suspected of circumventing the proposed ringfence, the regulator faces the gruelling task of requesting consent from the Treasury on three occasions before its investigation can proceed.
The Bank of England’s erstwhile governor, Lord King, and the Archbishop of Canterbury, Justin Welby, are expected to raise the issue and ensure that the legislation is not weakened through interference from the financial sector.
RBS and Dissent
The outbound chief executive of the Royal Bank of Scotland, Stephen Hester, told the Banking Standards Committee last year that the new ring-fencing proposals may increase the risk of banks needing to be rescued in the future.
But the bank was fined again by the City regulator this week, which will draw particular attention to any banks that are seen to be protesting against stronger regulation.
The Financial Conduct Authority issued the bank with a £5.6 million fine for failing to report over a third of its investment banking deals between November 2007 and April 2013 and neglecting to report over 800,000 at all.
Misreporting of trades begun under the leadership of Fred Goodwin and continued under Mr Hester, the regulator observed.
Tracey McDermott, the FCA’s director of enforcement and financial crime at the FCA, said there was no excuse for banks to flout the rules on accurate reporting.
"Effective market surveillance depends on accurate reporting of transactions," she said.
"We have set out clear guidance on transaction reporting, backed up by extensive market monitoring, and we expect firms to get it right."
Keith McDonald
Which4U Editor
If you enjoyed this article:
- Check out the latest articles on our Finance Blog.
- Sign up for our free e-newsletter.
- Follow us on Twitter for regular updates.
{loadmodule php,TwitterButton}