Which? has joined forces with leading MPs from Britain’s three main political parties to launch a new inquiry into reform of the banking industry.
The new ‘Future of Banking Commission’ will be chaired by former shadow home secretary David Davis MP, and will include Lib Dem Treasury spokesman Vince Cable and chair of the Treasury Select Committee John McFall. Peter Vicary-Smith, Which? chief executive, will also sit on the Commission
The Commission plans to put consumers at the centre of reform of the banking industry, and will hold a series of evidence sessions where members of the public, as well as senior industry figures, will be interviewed.
Which? research shows that eight in ten people don’t think banks have done enough to ensure that the credit crunch doesn’t happen again and six in ten don’t believe the banks have learnt their lesson from the crisis.
Banking Commission is needed to restore public trust
Peter Vicary-Smith, Which? chief executive, said: ‘Since the financial crisis in October 2008, a number of reports have looked at the causes and consequences of the crisis and suggested possible solutions, but they’ve all been written from the perspective of bankers. Which? wants to ensure that, for the first time, the strong feelings of the general public are finally heard and acted on.
‘It seems ludicrous that past banking inquiries have ignored those who have been hit strongest by the banking crisis – the ordinary people and the wider interests of society. This is an opportunity to right that wrong. We believe that this Commission is needed to restore trust between the public and the banks.’
What are the aims of the Commission?
The aim is to establish an independent banking commission that will:
- listen to the public’s concerns about banking
- listen to the perspectives and concerns of industry and other bank stakeholders
- enable the restoration of public trust and confidence in the banking system
- make recommendations to establish a reformed banking system that serves the needs of ordinary people and the wider interests of society.
What areas will the Commission look at?
The Commission will seek to address the following issues:
- The social function of banking: What are the essential and socially useful services which banks provide to people and how can these be protected from instability?
- The impact on the public of the financial crisis
- The appropriate structure of the banking system
- The alignment of the interests of consumers, banks, investors and other stakeholders
- Ensuring that competition, particularly in retail banking, works to deliver benefits for consumers, including issues arising from the withdrawal of state aid from the sector
- Effective corporate governance, accountability and linking remuneration to the fair treatment of customers and avoidance of rewards for taking excessive risk
- Regulation of the banking sector
- Provision of suitable products with fair charging structures to consumers
- Impact on customers of any proposed reform
Evidence will be sought from ordinary people themselves as well as a wide cross section of interest groups including the banking industry, academics, the Bank of England, the Financial Services Authority, trades unions and other consumer groups.
Other members of the Future of Banking Commission include Philip Augar (formerly a Group Managing Director at Schroders’ and now a writer on the financial services industry), Clare Spottiswoode (former director general of OFGAS), David Pitt-Watson (Chair, Hermes Focus Asset Management) and Roger Bootle (Managing Director Capital Economics).
The Commission has been developed by Which?, following a proposal from John McFall MP, to put ordinary people and the wider interests of society at the heart of a reformed banking system.
Which? Big Banking Debate
Which? will be organising the Which? Big Banking Debate, which will be solely focused on getting consumer views and feeding into the Commission’s discussions. The Commission will also consist of three further events in early 2010 where bankers, politicians, regulators, trade unions and business leaders will give evidence.
These events will be held in a Select Committee style with organisational interests and commentators invited to give evidence. After the public sessions the Commission will meet to agree the report which would be published early in the life of the next Government to influence its start up work.
Commission backed by leading politicians
David Davis said: ‘All of the recommendations on banking reform to date have understandably been by bankers, of bankers, and to some extent for bankers. It is past time that we had a proper analysis of banking from the perspective of the people they serve, the savers, borrowers, and businesses that make the economy work. I hope this Commission will deliver that.’
John McFall commented: ‘The banking crisis has had such a profound effect on people, that we believe their views and concerns must be at the heart of banking reform. There is a social dimension to the crisis and bankers, regulators and politicians need to understand and take account of these concerns.’
Vince Cable MP said: ‘It is high time that the voices of consumers were recognised in the debate over the future of the country’s banking services not least since the banks owe their continued existence to the taxpayer and rely on their guarantee. I am pleased to serve on this Commission which I hope will go some way to recovering the trust between banks and the people they serve.’
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