Call for criminal prosecutions when bankers break the law

By TOM PETERKIN
Published on 01/07/2012 00:00

FOUR out of five people want individuals to be prosecuted when banks break the law, according to a new survey.

Research into attitudes towards the banking crisis also showed that two-thirds of people believe the government will not act in their best interests when implementing banking reform.

The survey by the consumer watchdog Which? found that one fifth of those asked thought that the regulatory body the Financial Services Authority is effective in regulating UK banks. The survey was conducted by YouGov and involved 1,035 adults.

Which? is calling on the government to ensure criminal prosecutions can be brought against individuals – up to boardroom level – who presided over corrupt practices.

The organisation also wants the process of ringfencing retail banking from investment banking to be fast-tracked.

Which? chief executive Peter Vicary-Smith said: “Consumers are clearly fed up with one banking scandal after another.

“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.

“The fines handed down to banks are not a deterrent. Last week, Barclays was fined less than £60 million in the UK, compared to £231m in the US, and has paid out £2 billion in compensation and settlements in the last three years, but that seems to have little effect.

“The government needs to change the rules so that criminal prosecutions can be brought against individuals if banks have flouted the rules. We also want the banking sector referred to the Competition Commission immediately. More competition is essential to force a change in the culture of British banking.”

The Independent Commission on Banking led by Sir John Vickers has said that banks should ringfence their high street banking businesses from their “casino” investment banking arms.

The Vickers report said its reforms would cost between £4bn and £7bn to implement. It stopped short of calling for a full-scale separation of two banking arms, which was suggested by business secretary Vince Cable when he was in opposition.

However, the disclosure of fresh banking scandals last week led to John Thurso, a Liberal Democrat member of the Treasury select committee, calling for the more radical complete separation as originally envisaged by Cable.

Thurso said yesterday: “I think we actually have to go further than Vickers. It is not just about ringfencing, it is about a total separation and when bankers like Bob Diamond tell me, as he has done in committee ,‘Oh well, nobody in the universal bank has failed’, I now say to him, that was because you were rigging the markets. If it had been a fair market you probably would have failed.

“The money that is going in from the high street is going into the City gambling dens instead of being available to be lent to businesses and I think there is no choice now than to, by law, separate investment banking from retail banking.”