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Two HSBC directors quit over jail threat

Your Money
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Your Money
Posted:
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05/12/2014

Two directors of HSBC’s UK arm are poised to quit in protest at new Bank of England rules that pave the way for lengthy jail sentences to be imposed on senior managers of failed lenders, according to reports.

Sky News said Alan Thomson, a member of the audit and risk committees of HSBC Bank, has already tendered his resignation and will leave the board at the end of October.

Meanwhile John Trueman, deputy chairman of the legal entity that manages the UK high street and commercial bank, is also understood to be on the verge of resigning as a result of the rule changes from the Bank.

The likely departures of both men are said to be have been caused by proposals from both the Prudential Regulation Authority (PRA) and Financial Conduct Authority (FCA) to strengthen accountability for senior bankers.

While not particularly high-profile, the departures are a concern for the whole banking sector given they are the first bankers to have decided to relinquish their roles because of the impending new regime.

The new rules potentially coming in mean bank directors and other top executives could face a new criminal liability if they were deemed to have taken reckless decisions which led to the collapse of their employer.

They would also be subject to disciplinary action from the City regulator for up to six years, twice the current time-limit, and be obliged to certify that all customer-facing staff and material risk-takers are competent to perform their duties.

Crucially, the new measures would be framed on a ‘guilty until proven innocent’ basis, making it more difficult for bank bosses to clear their names if their organisation failed.

The proposed change comes alongside a crackdown on bonuses, with bankers forced to defer bonuses for seven years from next year, creating the toughest pay framework of any global financial centre.

The government is taking action following a seemingly never-ending list of misdemeanours committed by banks in the run-up to the financial crisis and beyond.

George Osborne, the Chancellor, pushed for the more stringent regime in the aftermath of the banking crisis and the conclusions last year of the Parliamentary Commission on Banking Standards, set up following the Libor rate-rigging scandal.


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