The new UK and US "action plan" for safer banking

Five questions answered.

The UK and US have issued a joint paper outlining an action plan for flagging banks that hopes to protect the tax payer from costly financial bail outs.

Who exactly has issued this paper?

The Bank of England and America's Federal Deposit Insurance Corporation.

What are the key points of this ‘action plan’?

Key points include, establishing a single key regulator that will take responsibility for overseeing the insolvency of a big international bank.

Requiring big banks to hold enough capital and debt that could be converted into capital at the top of their corporate structures, in a hope that this capital and debt would absorb any losses the bank makes while its issues are resolved and the bank is made safe again.

They also request that banks continue with critical services, insulate foreign operations, sack reprehensible management and reduce parts of the bank that caused the problems in the first place.

What outcome is it hoped these key points will result in should there be another banking crisis?

That, for example, the Bank of England would not have to call on the Treasury  to put as much money into the Royal Bank of Scotland or an HBOS that was facing collapse, as happened in the most recent banking crisis, as the bank’s creditors would have to become shareholders.

The idea is that this would limit the cost to the tax payer and wider economy if another banking crisis should arise.

What banks in particular is this action plan aimed at?

Banks such as the UK's Royal Bank of Scotland and Barclays and Citigroup and JP Morgan in the US.

What other consequences could occur from this action plan?

According to the BBC’s business editor this could result in: “the costs for banks of raising money would rise: as you will have deduced, the risks of investing in and lending to banks increases in proportion to the perceived reduction in the implicit insurance against failure they receive from the state.”

He adds that banks will: “have to make bigger returns to generate a profit. And, everything else being equal, that means they would feel obliged to charge their customers rather more for loans and for keeping money safe."

A banker in London. Photograph: Getty Images

Heidi Vella is a features writer for Nridigital.com

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All doctors kill people – and the threat of prosecution is bad for everyone

We must recognise the reality of medical practice: just because a doctor makes a mistake, that doesn’t mean they’ve all broken the law. 

On 15 November the Court of Appeal quashed the 2013 conviction for gross negligence manslaughter (GNM) of a senior consultant surgeon in London, David Sellu. Sellu, who had completed his prison term by the time the appeal was heard, will never get back the 15 months of his life that he spent in jail. Nor will the personal and family trauma, or the damage to his reputation and livelihood, ever properly heal. After decades of exemplary practice – in the course of the investigation numerous colleagues testified to his unflappable expertise – Sellu has said that he has lost the heart ever to operate again.

All doctors kill people. Say we make 40 important decisions about patients in a working day: that’s roughly 10,000 per annum. No one is perfect, and medical dilemmas are frequently complex, but even if we are proved right 99 per cent of the time, that still leaves 100 choices every year where, with the benefit of hindsight, we were wrong.

Suppose 99 per cent of those have no negative consequences. That’s still one disaster every 12 months. And even if most of those don’t result in a fatal outcome, over the course of a career a few patients are – very regrettably – going to die as a result of our practice. Almost invariably, these fatalities occur under the care of highly skilled and experienced professionals, working in good faith to the very best of their abilities.

If one of these cases should come before a crown court, the jury needs meticulous direction from the trial judge on the legal threshold for a criminal act: in essence, if a doctor was clearly aware of, and recklessly indifferent to, the risk of death. Sellu’s conviction was quashed because the appeal court found that the judge in his trial had singularly failed to give the jury these directions. The judiciary make mistakes, too.

Prosecutions of health-care professionals for alleged GNM are increasing markedly. The Royal College of Surgeons of England identified ten cases in 2015 alone. This must reflect social trends – the so-called “blame culture”, in which we have come to believe that when a tragedy occurs, someone must be held responsible. In every one of these cases, of course, an individual’s life has been lost and a family left distraught; but there is a deepening sense in which society at large, and the police and Crown Prosecution Service (CPS), in particular, appear to be disconnected from the realities of medical practice.

Malpractice investigation and prosecution are horrendous ordeals for any individual. The cumulative impact on the wider health-care environment is equally serious. In a recent survey of doctors, 85 per cent of respondents admitted that they were less likely to be candid about mistakes, given the increasing involvement of the criminal law.

This is worrying, because the best way to avoid errors in future is by open discussion with the aim of learning from what has gone wrong. And all too often, severely adverse events point less to deficiencies on the part of individuals, and more to problems with systems. At Sellu’s hospital, emergency anaesthetic cover had to be arranged ad hoc, and this contributed to delays in potentially life-saving surgery. The tragic death of his patient highlighted this; management reacted by putting a formal rota system in place.

Doctors have long accepted the burden of civil litigation, and so insure themselves to cover claims for compensation. We are regulated by the General Medical Council, which has powers to protect patients from substandard practice, including striking off poorly performing doctors. The criminal law should remain an exceptional recourse.

We urgently need a thorough review of the legal grounds for a charge of GNM, with unambiguous directions to the police, CPS and judges, before the spectre of imprisonment becomes entrenched for those whose only concern is to provide good care for their patients. As Ken Woodburn, a consultant vascular surgeon in Cornwall who was accused and acquitted of GNM in 2001, has said: “You’re only ever one error away from a manslaughter prosecution.”

This article first appeared in the 01 December 2016 issue of the New Statesman, Age of outrage