In a week that has seen two major banking institutions fail the public, from corruption at the heart of Barclays, to IT failure at NatWest, Which? is calling on the government to scrap its existing timetable on implementing banking reform and take urgent action.
We want the government to change the rules so that criminal prosecutions can be brought against individuals if banks have flouted the rules.
Eight in ten (83%) haven’t seen any improvement in UK banks in last 12 months
Change British banking culture
Which? chief executive Peter Vicary-Smith said: ‘Banks and bankers will continue to be seen as untouchable unless individuals are held to account for their actions and the culture of banking is changed for good.’
He added: ‘We want the banking sector referred to the Competition Commission immediately. More competition is essential to force a change in the culture of British banking.’
Nearly two thirds (66%) are not confident that the government will act in consumers’ best interests when implementing banking reform
Prosecute law breakers
A consumer survey demonstrates the scale of distrust in the banking industry and a lack of faith in the government and the regulator to clear up problems. Eight in ten (78%) people think that where banks have broken the law, individuals should be personally prosecuted.
Consumers also continue to have low confidence in the government to handle the banking crisis effectively, with two-thirds (66%) saying the government will not act in their best interests when implementing banking reform.
Eight in ten (83%) also think banking has got worse or stayed the same in the last year. Only one in five (20%) think that the Financial Services Authority (FSA) is effective in regulating UK banks.
Eight in ten (78%) agree that where the law is broken by a bank, the individual(s) involved should be personally prosecuted
Banking code of conduct
Which? says the banking industry should have a new professional standards body imposed on it, with individuals required to comply with a code of conduct like the medical profession, and individuals struck off for malpractice.
And the government should also start implementing the ring-fence between retail and investment banking as soon as practicable, and not wait until the banks’ preferred date of 2019.
Only one in five (20%) agree that the FSA is effective in regulating UK banks
Urgent and immediate action
Which? is calling for urgent and immediate action to put trust and ethics back into the banking system. It is nearly a year since the Vickers Commission reported and we continue to see shocking behaviour in the banking sector with no obvious improvements in high street competition. We want the government to:
- Refer the banking sector to the Competition Commission immediately to force changes so that high street banking delivers better products and services and has a culture that makes customers the number one priority.
- Change the rules so that criminal prosecutions can be brought against individuals – all the way up to board level – if they have presided over corrupt practices.
- Introduce legislation so that consumer groups can take collective action on behalf of consumers who have lost out financially from corrupt banking practices.
- Speed up its existing timetable for ring-fencing retail banking from the corrosive effects of the investment banking culture.
- Enforce professional standards and compulsory training for the banking industry.
Which? wants a strong regulator that stands up to the industry and promotes competition, an open regulator that tells consumers what it does, and a proactive regulator that acts on issues before they become problems.