THE report published by the Parliamentary Commission on Banking Standards last week grabbed headlines by calling for criminal sanctions for reckless bankers.
That popular gambit was part of a wider set of proposals aimed at making UK banks more sustainable. It’s all about a new world of sensible banking in which sales targets and short-term risk-taking are eclipsed by a culture in which customers come first.
It was unfortunate, then, that the report came two days after the so-called “bail-in” of the Co-operative Bank was set out. That’ll be the only banking name on the UK high street with a culture in alignment with the commission’s wishes.
The demise of the Co-op Bank as a true mutual – it will now be listed on the stock market – is depressing for the many people (myself included) who in recent years held it up as the bank of choice for anyone with an interest in ethics and a customer-focused culture.
When the financial crisis unfolded it was the main beneficiary of the (sadly modest) exodus of customers from the disgraced high street names. Those who turned to the Co-op couldn’t fail to notice that no longer were they being subjected to a hard-sell every other time they set foot in a branch.
High street banking options are now more limited than they have been in a long time. Emerging players including Virgin Money, Tesco Bank and even Handelsbanken may yet mount a challenge to the status quo, but Co-op customers will hope that its more ethically minded culture somehow remains undiminished.
The commission’s proposals may be a source of encouragement, yet they must be taken with a pinch of salt at this stage. After all, MPs urging jail sentences for bankers, when politicians and regulators are also culpable for the banking crisis, clearly possess a healthy sense of irony. It’s a proposal that is unlikely to be adopted, however, not least because defining reckless banking and who is responsible for it is legally and politically toxic.
While the Prime Minister claims to welcome the report, the chances of the main proposals being implemented by a Conservative-led government are slim. They talk a good game when it comes to reining in the excesses of the City but they know on which side their bread is buttered.