Senior bankers could face up to seven years in prison under new rules revealed by the Financial Conduct Authority (FCA) today.
Following a series of scandals such as Libor and Forex, the financial watchdog has changed the legal requirement for punishment from “innocent until proven guilty” to “presumption of responsibility”.
This means bankers will be guilty of misconduct until they can prove they "took such steps as a person in their position could reasonably be expected to take" to prevent an offence from happening.
The FCA had already confirmed that the rule was changing, but today's announcement made clear the extent of punishment those found accountable could face.
"Today's policy measures are an important step in ensuring that regulators have the tools at their disposal to hold individuals to account and they build on the cultural change we are beginning to see in the boardrooms of firms across the country," said Martin Wheatley, chief executive of the FCA.
At an event hosted by Bloomberg, he said he expected this “heightened accountability” to “reduce the need for individual pursuits by regulators”.
He added that those at the top, namely directors, were focused on transforming the industry into a trusted one.
"Boards are spending significant amounts of their time on culture and regulatory issues. Some boards are saying they spend up to 70 or 80 per cent of their time debating these issues," he said.