Bankers should pay for their misdeeds

unning to more than 360 pages, the final report of Sir John Vickers’ Independent Commission on Banking is a substantial work, which identifies the problems which led to the near collapse of Britain’s financial institutions and puts forward measured but radical proposals to avoid a repeat of such a disaster in the future.

The key recommendation is that institutions must “ring-fence” retail banking – the business they do with individual customers and small firms – from investment banking, the high-risk world of high finance which includes the trading in complex financial instruments. Given that their investment arms nearly brought down the banking system, potentially taking with it the savings, mortgages and livelihoods of millions of people, this is an eminently reasonable proposal.

Since their culpability in what was revealed to be a crisis in out-of-control capitalism, the public had a right to expect the banks would hold up their hands, accept the recommendations which the UK government deserves credit for promising to implement, and get on with rebuilding trust in their shattered reputations.

Sadly, the response has not been humility, but a threat to pass on the costs of this change to hard-pressed consumers. Even before the crisis banks had been trying to impose higher charges on customers. It would, therefore, be completely unacceptable for them to use the Vickers report as an excuse to punish those who had nothing to do with the crisis for the errors of avaricious, irresponsible bankers.