The U.K. government risks making a “botched job” of banking reform by trying to speed up passage of a bill setting new standards for the industry, said Andrew Tyrie, the chairman of Parliament’s Treasury Committee.
A government move this week to accelerate the legislation’s passage through the upper chamber of Parliament, the House of Lords, won’t leave lawmakers time to consider amendments that have seen the bill swell to 160 pages from its original 35, Tyrie said in an interview in London yesterday.
The amendments include changes made after a Banking Commission made up of members of both chambers of Parliament reported in June. That panel, which was also headed by Tyrie, was established by Chancellor of the Exchequer George Osborne last year in the wake of a series of banking scandals from the 2008 bailout of Royal Bank of Scotland Group Plc to the rigging of Libor. It advocated delays of as long as a decade on bonus payouts and making the reckless management of lenders a crime.
“This legislation is being rushed,” Tyrie, a Conservative Party lawmaker like Osborne, said in an interview in his office in Parliament. “It’s hugely complex: Amendments piled on amendments piled on amendments. We must get this bill right, and the Lords need more time to do it.”
Banking Commission members are concerned that even in areas where the government has said it supports their recommendations, the implementation in the bill may not be correct, according to Tyrie.
Elements of the bill diluted by government amendments include a proposal to allow regulators to split up banks that try and breach a firewall between banks’ consumer and investment operations.
The panel’s recommendation that licenses be introduced for bankers isn’t currently mentioned in the bill.
Commission recommendations rejected by the government include the introduction of a statutory remuneration code to better align risk and reward, giving power to the regulator to subject banks to special measures if failings are highlighted, and a review of proprietary trading.
“The government will not only be betraying their promise when they established the commission, but it will be seen and disowned by members of the commission for indulging in cynical, low, political-level, sharp practice,” John McFall, a Labour member of the House of Lords who sat on the commission, said in reaction to the proposal on Nov. 6.
“The bill would be a botched job, were we not to take the time to get it right,” Tyrie said.