When the music stops – holding bank executives accountable for misconduct
by Rita Oliveira, Ruth Walters and Raihan Zamil
FSI Insights on policy implementation No 48 is published in February by BIS (The Bank for International Settlements). As it is known, The Great Financial Crisis and its aftermath exposed a wave of banking scandals, triggering financial instability and eroding public confidence in banks. Amid economic uncertainty, societal frustration mounted at regulators’ perceived inability to hold executives accountable for failures within their banks. In pursuing cases of misconduct, supervisory authorities found it difficult to pinpoint the role of high-level executives because they were often distant from the day-to-day activities where the alleged wrongdoing occurred.
This paper reviews the evolution of regulatory frameworks that govern the accountability of banking executives and outlines their implementation challenges. Some authorities have introduced individual accountability regimes that impose specific responsibilities on senior bank executives, while others rely on broader regulatory frameworks to pursue corporate wrongdoing. Regardless of approaches taken, all frameworks are ultimately reliant on robust supervision and enforcement.
A multi-faceted approach, that we label the “accountability stack”, is needed to get in “all the cracks” that drive senior executive behaviour. That stack includes layers of seemingly disparate regulatory and supervisory instruments that interact in such a manner where the whole may be more effective in fostering individual accountability than the sum of the parts. Above all, the stack needs to be supported by the institutional will to act.
You can find the paper hier: https://www.bis.org/fsi/publ/insights48.pdf
