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Banking culture must change, says Which?

Independent Commission on Banking findings

Banks pay up

Now the banks have lost the appeal we think it’s time they paid up

The Independent Commission on Banking has confirmed that it is considering the break-up of the major UK banks. This would mean separating retail and investment banking. 

The Commission, which is chaired by Sir John Vickers, is charged with reviewing the bruised and battered financial services sector. It is expected to focus on the structure of the major banks and may conclude that deposit accounts need to be ring-fenced to protect consumer’s savings. 

This approach would chime with one of the key recommendations of the Which? backed Future of Banking Commission, that heard evidence from the likes of Lord Turner, of the Financial Services Authority, Bank of England governor Mervyn King and Royal Bank of Scotland chief Stephen Hester. 

A failing system

Which? chief executive Peter Vicary-Smith, who sat on the Future of Banking Commission, said: ‘The financial crisis highlighted serious failings in our banking system and we need root to branch reforms to prevent it from happening again in the future.

‘Banks must be allowed to fail without bringing down the rest of the economy and we must never again be faced with a situation where consumers pay the price for the failures of the banking system. 

Competition on the high street is at an all-time low, with the three biggest retail banking groups consisting of two that would have collapsed without taxpayer support and one that has a woeful record on customer services. This is not the template for a market that works well for consumers.

‘When the government sells off its stakes in the bailed-out banks it must ensure that the public interest is served and competition is increased, instead of shifting retail branches from one big bank to another, as we saw with the sale of RBS branches to Santander.’

For more on the Future of Banking Commission see the Which? campaigns webpages.

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