George Osborne has announced changes to the banking industry to protect customers and improve professional standards – a move welcomed by Which? and a key ask of our Big Change campaign.
In response to the Banking Reform Bill, Which? executive director, Richard Lloyd, said: ‘We’re pleased to hear the Chancellor say that banking must be reset to work for customers not bankers. This is the big change that people want and that Which? has been campaigning for.’
Regulation, ring-fencing and competition
In a speech today, Mr Osborne stated that an ‘electrified’ ring-fence will be introduced between banks’ retail arms and riskier investment arms. It will also be made possible for consumers to switch bank accounts within seven days.
On the proposals, Richard Lloyd said: ‘It is absolutely right to enforce a tough ring-fence between retail and investment banking to protect the interests of ordinary customers.
‘The proposed changes to the vital payments system should benefit consumers by increasing competition, creating a more level playing field for new and smaller banks.’
Culture and standards must improve
Mr Osborne added that professional standards and culture in banking must be improved, and he has asked the Parliamentary Commission on Banking Standards to look at how this can be achieved.
Which? is encouraged that the government accepts the need for proper professional standards in banking. The Parliamentary Commission must now recommend far-reaching proposals to reform banking culture and practices, including a fully independent code of conduct that is backed by statute.
Which? wants Big Change in banking
Which? has been campaigning for Big Change in banking, following a string of scandals that left consumer trust in bankers at an all-time low. The Big Change campaign asks for:
- Bankers to put customers first, not sales – with pay and bonus schemes that prioritise customer service over sales.
- Bankers to meet professional standards and comply with a code of conduct – enforced by a professional standards body independent of the banking industry
- Bankers must be punished for mis-selling and bad practice – with stronger criminal sanctions up to board level if they have presided over corrupt practices.
Mr Lloyd said: ‘The reforms announced today could be game changing and good news for consumers used to despairing at shoddy service, unfair fees and complicated switching. However, in the past the banking industry has lobbied hard to water down reforms so we look to the government to see this through and make 2013 the year that banks start working for customers, not bankers.’