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By William James
LONDON, Dec 16 (Reuters) - Britain ushered in a new era ofbanking industry oversight on Monday when lawmakers gave theirfinal approval to reforms aimed at tackling the structural andcultural failings which led to the near-collapse of thecountry's financial sector.
The reforms are the result of a lengthy legislative processstarted after the 2007/8 financial crisis and a series ofmis-selling and rate-fixing scandals which shone a light onillegal and unethical behaviour at some of Britain's banks.
Among the main features of the bill are rules to force banksto separate their retail and investment activities and a newregime to make senior bankers more accountable - includingcriminal sanctions if their institution fails.
"This is a major milestone and marks the end of a three-yearprocess, led by the government, to make the UK banking systemstronger and safer so that it can support the economy, helpbusinesses and serve consumers," said Sajid Javid, the ministerin charge of the bill.
Javid said the new laws would help improve bankers'standards of conduct, generate extra competition in the industryand prevent British taxpayers from footing the bill for anyfuture bank failures.
The bill also introduces new rules to make sure bankers'bonuses are paid over a longer term, to stamp out excessiverisk-taking.
SIGNIFICANT STEP
The final stage of the legislative process came in the upperhouse of parliament late on Monday night when senior lawmakersagreed on the technical details of a regime to certify seniorbankers.
The package is expected to receive a rubber stamp approvalfrom Queen Elizabeth and become law later this week.
"The Bill is a significant step in facilitating a newdynamic," said Paul Garbutt, head of UK Financial Regulation ataccountants Grant Thornton. However, he said the onus was now onthe banks themselves to make sure the laws made a difference.
The driving force behind the legislation was a cross-partycommission on banking standards, set up by the government in thewake of the Libor rate-fixing scandal.
Based on evidence from regulators and many of London's topbankers, the commission produced five reports, culminating in a500-page set of recommendations released in June.
"We have had this crisis. The horse has bolted, what we havegot to do now is devise a stable door that can keep the nexthorse in," said Andrew Tyrie, chairman of the ParliamentaryCommission on Banking Standards, speaking in parliament lastweek.
The commission put heavy pressure on the government to adoptits proposed reforms as a whole, and was able to extractconcessions on several major issues even after the governmentwas reluctant on some measures.
Last month finance minister George Osborne asked the Bank ofEngland to decide whether it needed more powers to controlbanks' risk taking - moving towards a major recommendation fromthe banking commission which had initially beenignored.
