The Bank of England did not supervise the failed Bank of Credit and Commerce International in a 'proper and compete...
The Bank of England did not supervise the failed Bank of Credit and Commerce International in a 'proper and competent' manner according to a report published today by the Treasury and Civil Service Select Committee.
The committee's criticism of the Bank meets the condition laid down in an earlier report for compensation to be payable.
In April last year the committee ruled that depositors should be compensated if: 'the Bank of England had failed to discharge its supervisory duties'.
In the light of the findings of Lord Bingham, the committee concludes in its latest report that this condition has been met.
The committee rejects the Treasury's argument for not compensating depositors. 'The Treasury's case undoubtedly represents and argument against compensation of all losses in the case of all bank failures, but we are not advocating such a proposal. Each case of bank failure has to be considered on its own merits', the report says.
Unfortunately for the local authorities which lost money in BCCI, the findings of the select committee have not legal force. Former chairman of the committee MP Terence Higgins said last year the case for compensation could only be 'a moral one'.