Andrew Bailey: it's 'odd' UK bank bosses have avoided formal charges

Britain's chief financial regulator, Andrew Bailey, has said it is “more than odd” that the chairmen and chief executives who were at the helm of the failed banks have avoided formal charges.

Andrew Bailey, head of the new Prudential Regulation Authority, said it is "more than odd" that junior bankers have faced charges but not bank bosses. Photo: Paul Grover

 

 

The chief executive of the Prudential Regulation Authority (PRA) said that it was a “source of some surprise” to him that authorities had brought cases against junior bankers but not senior directors.

Speaking at a conference in London, Mr Bailey said it was “not the job of the regulator” to say if individuals should go to prison.

But he added: “It is to my mind a very striking observation and difficulty with the crisis that no formal action has been taken against any chief executive or any chairmen of a failed institution. Not because I have a personal vendetta against them but it is more than odd that action has been taken against people lower down institutions but not at the top.”

He told the Future of Financial Services Summit that Barings directors had been struck off after the bank was brought down by Nick Leeson, the rogue trader in 1995. “They did not like that but it happened,” he said. “And it has been the source of some surprise to me that it has not happened in wake of the crisis to date.” But he said he "welcomed" Vince Cable's announcement to investigate a boardroom ban for the three former bosses of HBOS, Lord Stevenson, Sir James Crosby and Andy Hornby, in the wake of the Parliamentary report into the collapse of the bank.

Mr Bailey said he had been told that bosses were protected so far because there was a “problem with the trail of evidence” that could convict a chief executive. He said if this were the case, then it was evidence of a “flaw in the system” peculiar to banking that allowed bosses to “delegate responsibility as well as tasks”. He said the flaw “clearly we need to address and fix.”

Chuka Umunna, the shadow Business Secretary, said some bank bosses should go to jail. “Particularly in respect of the Libor rigging scandal, it seems to me that we will not rebuild trust with the public or affect a culture change in finance until custodial sentences are imposed on those guilty of criminal wrongdoing.”
Mr Umunna also said Barclays decision to announce £40m of bonuses on Budget day when the focus was on austerity sent “all the wrong messages”. Ashok Vaswani, boss of retail banking at Barclays, said the timing of the decision had been a “mistake”.