FORMER CBI director-general Sir Richard Lambert came in for criticism yesterday after urging Britain’s largest lenders to abide by a new set of guidelines aimed at restoring trust in the banking sector.
Critics said that leaving the banks to police themselves would render the iniatitive as mere “window dressing”.
Announcing the new Banking Standards Review Council (BSRC), Lambert said the independent body will be a “champion” for improving conduct in an industry tainted by scandals such as the mis-selling of loans and rigging benchmark interest rates.
Lambert said: “Rebuilding confidence and trust in the banks is especially vital in the UK, because of the size of the banking system and the importance to the economy of London’s role as an international capital market.”
However, the Robin Hood Tax campaign – a coalition of charities and other organisations that is calling for the introduction of a levy on financial transactions to help tackle poverty and climate change – expressed doubts about the effectiveness of the BSRC, which will have no powers to levy fines for wrongdoing.
Spokesman David Hillman said: “Any attempt to reduce bad behaviour in the financial sector is welcome, but there must be concern that a voluntary initiative funded by the banks themselves will amount to little more than window dressing.
“Banks caused the biggest crisis of a generation – until they are made to clear up that mess they will have been let off the hook.”
Lambert was asked to come up with proposals for the body by the chairmen of Barclays, HSBC, Lloyds Banking Group, Nationwide, Royal Bank of Scotland, Santander and Standard Chartered. He will act as interim chairman until a permanent chair is appointed by a panel led by Mark Carney, the Bank of England governor. The panel of “respected figures” from outside the banking industry will also ratify the appointment of the BSRC chief executive.
Carney said: “We need a financial system that is safe, fair and acts with integrity. Integrity, however, cannot be regulated. It must come from within. Only exemplary behaviour can confer the social licence necessary for our banks to be active participants in ensuring that the UK financial system remains a global good and a national asset.” He urged all banks operating in the UK, both domestic and foreign, to support the endeavours of the BSRC – a call backed by Peter Vicary-Smith, chief executive of consumer association Which?.
Vicary-Smith said: “After years of successive scandals, consumer trust in the banking industry remains appallingly low, despite the flurry of new rules and legislation. A big change in the culture of banking is required so that customers, not bankers, are put first. We urge every bank and building society to sign up without delay, and Which looks forward to working with the new body to make sure that the interests of consumers are at the top of its agenda.”
The BSRC will require banks to commit to improving their culture and practices and to report back on their performance to the public each year.
It will set standards of good practice that may include whistle-blowing protocols, processes for handling small firms in distress, dealing with conflicts of interest in capital market activity and managing high-frequency trading.
The body will publish an annual report setting out where progress is being made by the sector and by individual banks, and what more needs to be done.
City law firm Clifford Chance, which last month said it found no evidence that RBS was guilty of “distressing otherwise viable businesses”, is working on the legal structure of the BSRC.