Banks examine ‘early warning system’ to fight misconduct

BANKS are exploring setting up an “early warning system” to identify major misconduct by their staff before it causes too much damage.

An independent review into bad bank behaviour is working up plans for an industry-wide data system that could identify and flag up systemic misconduct earlier, The Daily Telegraph has learned.

Former Institute of Directors boss Simon Walker is leading the independent review on behalf of bank trade body UK Finance, with final recommendations expected by October.

The review was set up in response to a string of major bank scandals, including revelations regarding past mistreatment of small firms by RBS and HBOS. Lenders are also footing the bill for past mis-selling of payment protection insurance, which is forecast to ultimately cost them more than £40bn.

Mr Walker’s review is understood to be assessing how past industry-wide misconduct could have been picked up earlier, as well as the role confidential out-of-court settlements played in suppressing information.

The review is collating complaints data from lenders covering the last three years, in conjunction with researchers at Kingston University.

A real-time data system that pools complaints is one option under consideration. The review is also expected to judge the merits of setting up a new dispute resolution body to settle complaints between lenders and small businesses.

A spokesman for UK Finance said lenders were committed to improving standards, adding: “We look forward to the publication of the independent review and understanding what more can be done to support the UK’S SMES.”

Mr Walker declined to comment.