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Criminal sanctions for reckless bankers

The Government last week set out details of a proposed new criminal offence for reckless misconduct for senior bankers, pushing forward reforms suggested in the wake of the LIBOR scandal.

The offence forms part of 86 amendments to the Banking Reform Bill, which is currently going through the House of Lords, and represents the biggest ever overhaul of Britain’s banking system.

According to the HM Treasury official briefing for Peers, the offence relates to “reckless misconduct in the management of a bank” and covers banks and building societies, but not credit unions.

“The new offence will be applicable only to individuals covered by the new Senior Managers Regime,” says the briefing.

“Senior managers could be liable if they take a decision which leads to the failure of the bank, or fail to take steps available to them to prevent such a decision being taken,” it says. “The offence will only apply to behaviour which falls far below the standard that could reasonably be expected of a person in that position – this is similar to the test for corporate manslaughter. In addition, at the time the decision was taken, the senior manager must have been aware of a risk that its implementation may cause the failure of the bank.”

Those found guilty of the offence face a maximum prison sentence of seven years and/or an unlimited fine.

The Bill is expected to receive Royal Assent in the early part of 2014.

Contact Jonathan Fisher QC

If you think that you may be affected by these changes and require specialist advice, contact Jonathan Fisher QC on +44 (0)20 7427 463 or click here to make an electronic enquiry.

Anti-corruption and the National Crime Agency
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The views expressed in this article represent those of the author and not Bright Line Law.

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