The Parliamentary Commission on Banking Standards was a joint committee appointed by Parliament in July 2012. It was chaired by Lord Tyrie, then Conservative MP for Chichester and chair of the House of Commons Treasury Committee. The commission was established in the context of the 2008 financial crisis, and specifically following the 2012 London Inter-bank Offered Rate (LIBOR) scandal. The commission was established with the remit to:
- consider the “standards and culture of the UK banking sector”;
- assess the lessons learned for corporate governance and Government policy; and
- to make recommendations for legislative and other regulatory action.
The commission published four reports between December 2012 and April 2013, on the following subjects: banking standards; banking reform; proprietary trading; and the failure of Halifax/Royal Bank of Scotland (HBOS). The commission’s fifth and final report, Changing Banking for Good, published in June 2013, made over 100 recommendations. The report stated that its principal recommendations focused on five themes:
- making individual responsibility in banking a reality, especially at the most senior levels;
- reforming governance within banks to reinforce each bank’s responsibility for its own safety and soundness and for the maintenance of standards;
- creating better functioning and more diverse banking markets in order to empower consumers and provide greater discipline on banks to raise standards;
- reinforcing the responsibilities of regulators in the exercise of judgement in deploying their current and proposed new powers; and
- specifying the responsibilities of the government and of future governments and parliaments.
The Coalition Government published its response to the report in July 2013. It stated that the Coalition Government had made progress in reforming the banking sector, through the passing of the Financial Services Act 2012 and the introduction of the Banking Reform Bill (now the Financial Services (Banking Reform) Act 2013). The response also said that the Coalition Government strongly endorsed the principal findings of the report and intended to implement its main recommendations.
In November 2014, former members of the commission released a statement summarising the progress that had been made in implementing its recommendations. The former members acknowledged that while some of the report’s recommendations had been implemented, many others remained “unaddressed”. The commissioners stated that it was “essential that the momentum behind our reforms is maintained”.
In June 2018, in answer to a parliamentary question on banking standards, Theresa May’s Conservative Government stated that it had implemented the “major recommendations” of the commission’s report, both through the legislation cited above and by widening the remit of the Prudential Regulation Authority. The Government said that it continued to monitor the impact of those reforms.
