Britain could narrow scope of banker accountability rules, says minister

By Huw Jones

LONDON (Reuters) -Britain will consider narrowing the scope of rules that were introduced after the 2008 financial crisis to hold bankers accountable for risky decisions, financial services minister Andrew Griffith said on Tuesday.

The senior managers and certification regime (SM&CR) was rolled out from 2016 after few individual bankers were punished after taxpayers had to bail out lenders more than a decade ago.

Bankers say the rules are burdensome, causing delays in regulatory approval for the appointment of senior executives, but Griffith downplayed the likelihood of radical changes in proposed reforms across the financial system.

“It seems to be entirely unobjectionable that we should have some … certification for those involved in pushing systemic risk into the financial system,” Griffith told parliament’s Treasury Select Committee.

The ministry will begin a public consultation this quarter on what reforms are required.

Griffith said the focus will be on stopping “scope creep” by making the rules more “proportionate” and “balanced”, especially for smaller, less risky banks. The core underlying principles will remain the same, he added.

The minister also acknowledged that “in some cases authorisations are taking a long time” and that such delays have often been mentioned in his discussions with banks.

‘NO BONFIRE OF CONTROLS’

The UK finance ministry has set out proposed reforms to bolster the City of London’s role as a global financial centre in the face of increased competition from European Union centres such as Amsterdam and Frankfurt since Brexit.

The reforms included banker accountability and a public consultation on an easing of rules requiring banks to ring-fence their retail operations with a bespoke cushion of capital.

Banks argue that the requirement is largely obsolete since the introduction of separate rules to ensure a bank can be wound down in a crisis without taxpayer support.

“Our approach to this is to be cautious, to take a prudent approach. Let’s be very clear, there is no race to the bottom, no bonfire of controls here,” Griffith said.

The reforms do not “dismantle or dismember the core objectives of the ring-fencing regime”, he added.

But the proposed raising of the deposits threshold that triggers ring-fencing would reflect rules to wind up failing banks, Griffith said.

Delivering a significant number of the proposed reforms by the end of 2023 would be at the top of his to do list, Griffith added.

Separately, he said there would also be public consultations on new rules for crypto assets and a digital sterling if it goes ahead.

(Reporting by Huw JonesEditing by Alison Williams and David Goodman)