Five questions answered on the new banking reforms

Are we right to jail reckless bankers?

The government has today said it will back most of the recommendations made by the Parliamentary Commission for Banking Standards (PCBS). We answer five questions on the plans for reform.

What key recommendations is the government planning on implementing?

The key changes are:

There will be a new criminal offence of reckless misconduct by top bankers resulting in a possible jail sentence.

If a bank has been bailed out bankers bonuses could be repayable. Bonuses are also to be deferred by up to 10 years.

If any bank breaks any rules, the burden of proof shall lie with the relevant senior bankers to show that they took all reasonable steps to stop it happening.

What recommendations are the government not taking up?

The government did not agree to employ a much tougher leverage ration for banks, limiting the total amount of loans and investments a bank can make relative to the amount of capital the bank holds in order to absorb losses on those assets.

This would ultimately toughen limits on banks’ risk taking.

Chancellor of the Exchequer, George Osborne, has decided instead to stick to the lower level agreed and set out by the Bank for International Settlements in Basel.

The government has also refused to abolish its holding company for its stakes in Royal Bank of Scotland and Lloyds Banking Group, called UK Financial Investments. It said: "UKFI is staffed by highly expert professionals with extensive experience in the banking sector".

What else has Osborne said?

Today he said: “The government is determined to raise standards across the banking industry to create a stronger and safer banking system.

“I am pleased to say that the government will implement its main recommendations. Where legislative changes are required we will amend the Banking Reform Bill which is currently before Parliament.

“Cultural reform in the banking sector marks the next step in the government’s plan to move the whole sector from rescue to recovery and ensure that UK banks demonstrate the highest standards, and are able to support business and drive economic growth.”

What other changes will be made?

The Prudential Regulation Authority, which is responsible for ensuring excess risks do not build up within the banking system, will be given an extra job of ensuring competition among banks.

Is the government considering any changes in the way the Royal Bank of Scotland is handled?

The government did say it would consider the PCBS’s suggestion of splitting the Royal Bank of Scotland into a ‘good’ high street bank - that can be quickly sold back to the private sector – and a ‘bad’ bank which should be kept and existing problematic loans worked out. 

Guests listen to speeches at the "Lord Mayor's Dinner to the Bankers and Merchants of the City of London" at Mansion House on June 19, 2013. Photograph: Getty Images.

Heidi Vella is a features writer for Nridigital.com

Ukip's Nigel Farage and Paul Nuttall. Photo: Getty
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Is the general election 2017 the end of Ukip?

Ukip led the way to Brexit, but now the party is on less than 10 per cent in the polls. 

Ukip could be finished. Ukip has only ever had two MPs, but it held an outside influence on politics: without it, we’d probably never have had the EU referendum. But Brexit has turned Ukip into a single-issue party without an issue. Ukip’s sole remaining MP, Douglas Carswell, left the party in March 2017, and told Sky News’ Adam Boulton that there was “no point” to the party anymore. 

Not everyone in Ukip has given up, though: Nigel Farage told Peston on Sunday that Ukip “will survive”, and current leader Paul Nuttall will be contesting a seat this year. But Ukip is standing in fewer constituencies than last time thanks to a shortage of both money and people. Who benefits if Ukip is finished? It’s likely to be the Tories. 

Is Ukip finished? 

What are Ukip's poll ratings?

Ukip’s poll ratings peaked in June 2016 at 16 per cent. Since the leave campaign’s success, that has steadily declined so that Ukip is going into the 2017 general election on 4 per cent, according to the latest polls. If the polls can be trusted, that’s a serious collapse.

Can Ukip get anymore MPs?

In the 2015 general election Ukip contested nearly every seat and got 13 per cent of the vote, making it the third biggest party (although is only returned one MP). Now Ukip is reportedly struggling to find candidates and could stand in as few as 100 seats. Ukip leader Paul Nuttall will stand in Boston and Skegness, but both ex-leader Nigel Farage and donor Arron Banks have ruled themselves out of running this time.

How many members does Ukip have?

Ukip’s membership declined from 45,994 at the 2015 general election to 39,000 in 2016. That’s a worrying sign for any political party, which relies on grassroots memberships to put in the campaigning legwork.

What does Ukip's decline mean for Labour and the Conservatives? 

The rise of Ukip took votes from both the Conservatives and Labour, with a nationalist message that appealed to disaffected voters from both right and left. But the decline of Ukip only seems to be helping the Conservatives. Stephen Bush has written about how in Wales voting Ukip seems to have been a gateway drug for traditional Labour voters who are now backing the mainstream right; so the voters Ukip took from the Conservatives are reverting to the Conservatives, and the ones they took from Labour are transferring to the Conservatives too.

Ukip might be finished as an electoral force, but its influence on the rest of British politics will be felt for many years yet. 

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