On Tuesday, Chancellor George Osborne will face fresh demands to strengthen the new banking reform bill, as awareness of controversies within the Co-operative Bank and Royal Bank of Scotland (RBS) increases pressure on the government.
The Archbishop of Canterbury is joining former Tory chancellor Lord Lawson, former cabinet secretary Lord Turnbull, and additional senior public figures to revise the Chancellor’s banking regulations, which Lawson describes as “inadequate.”
The bill aims to put an end to the controversies that have rocked the banking industry over the last five years, and impose new, criminally sanctioned standards on bankers.
Once 35 pages long, the controversies have led to an evolved and complex piece of legislation not totaling 170 pages.
A Treasury spokesman has stated: “Our basic policy intention has been set. If their contribution in the debate suggests ways in which we can achieve that intention more clearly, we would do it.”
The senior peers are focusing on three main areas for improvement:
• A more robust licensing regime for senior (yet not board level) bankers.
• Sanctions for banks that undermine the “ringfence” extricating investment banking from high street lending.
• New, increased, powers for regulators.
The debate on banking standards was given new urgency in the last couple of days amid claims that state-controlled RBS purposefully drove struggling businesses down the drain.
Two reports published on the 24th of November, one by Sir Andrew Large – former deputy Bank of England governor, and Lawrence Tomlinson – an entrepreneur, show the RSB ruthlessly persecuting, and sometimes shutting down struggling banks which may otherwise beaten the recession.
The ugliest charge by far states that RBS’s property division sold the business properties of its victims at a profit. George Osborne has described the claims as “shocking.”
In light of the reports, RBS has announced law firm Clifford Chance is to lead an investigation into the charges.
The Co-operative Bank
In addition, The Mail on Sunday published a video on the 17th of November allegedly showing the Co-operative Bank’s ex-chairman Paul Flowers handing over GBP 300 for cocaine and talking over the purchase of other illegal drugs.
Flowers, who has since been released on bail, resigned from his position as the Co-op Group’s Deputy Chairman in June, amid claims over his expenses.
Now, an independent inquiry is to probe into the events as far back as 2008, focusing on the mismanagement of senior level executives, George Osborne has said.
“A critical stage”
With both these scandals raging in the press, the House of Lords has one last chance to fine tune a new and comprehensive regulatory regime for the City – something Tory chairman of the cross-party banking commission Andrew Tyrie has called a “critical stage.”