Reform pressure
IF THERE were those in the financial services industry who thought – four years after the collapse of Lehman Brothers – that the pressure for reform might be abating, they could hardly be more wrong. For all the efforts so far, the work of restoring trust in Britain’s banks has barely begun.
Ed Miliband’s tough talk at the weekend was, therefore, half right. In fact, the Labour leader’s threats to introduce modern-day “Glass-Steagall” legislation to split banks’ retail and investment operations can largely be chalked up to politics.
On the eve of his party conference, his remarks were a fine entrée for the big speech.
With new laws obliging banks to “ring-fence” retail deposits already in the works, Miliband’s fulminations are more rhetorical flourish than actual policy. But his counsel against backsliding is still valid. There has been some softening of Sir John Vickers’s proposed reforms to ensure that the taxpayer bailouts that followed the financial crisis need never be repeated.
Nor is Vickers all the banks have to worry about. Martin Wheatley, the head of the new Financial Conduct Authority, is also no pushover. He vows to crack down hard on abuses, with commodities markets an early priority.
Wheatley’s zest and commitment can only be applauded. Ultimately, however, neither he, nor Vickers, nor even the chancellor of the exchequer (whether Conservative or Labour) can do all the heavy lifting required.
The heart of the problem is one of culture, and, as such, it must be met by the banks themselves. The good news is that the pressure is building.
There is some evidence that the penny is dropping, at last. The new Barclays chairman is to change the bank’s pay structure so that sales are not the only yardstick and the new chief executive is pruning the most controversial tax unit. Meanwhile, Royal Bank of Scotland’s Stephen Hester has warned it could take a generation to change the culture of his industry, but at least he recognises the need to do so.
A start, then, but a most meagre one. – The Independent