Comment: Banking’s new code | health and safety

Terry Murden. Picture: Julie Bull
Terry Murden. Picture: Julie Bull
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IT HAS been a big week for cracking down on misbehaviour in the banking industry. First came a plan to introduce a bankers’ oath; yesterday we got the regulators’ proposals to improve responsibility and accountability.

Apart from demanding their employees swear an allegiance to proper conduct in the interests of customers, the banks will get the power to claim back millions paid out to those same employees if they are guilty of improper behaviour.

Six years after the banking world was engulfed by laissez-faire practices we are now awash with rulebooks, guidelines and codes of conduct. The “light touch” regulation that was meant to allow the financial services sector to flourish is being replaced with the toughest rules in the world to prevent unfettered gambling. Like any rules-based system, its effectiveness will be measured by the elimination of the problem through deterrence, or by its ability to adequately punish those who breach it.

So far, so well-meant. But as with many laws, there are unintended consequences, and these new rules are to an extent politically driven to satisfy a thirst for revenge.

There is a danger in giving London such a brutal range of weapons that a punitive system could prove counter-productive and even damaging to Britain’s ability to compete. If the new regulatory regime raises concerns about remuneration it may lead to a drain of talent from these shores to countries not disposed to introduce similar penalties.

Few doubt the need for a tightening up on regulation and for banks to be less self-serving and more responsive to customer needs. This goes hand in hand with the broader ambitions of the UK government and the Bank of England for banks to be smaller, more focused and better capitalised.

The result of recklessness is all around us and these new rules allow the authorities to pinpoint directly those who are culpable and make them account for their actions.

However, the banks have shown time and again that they are more than capable of beating off anything thrown at them. Bankers facing restrictions on their bonuses will merely be compensated through higher salaries or other incentives.

In this joint paper, the two new regulatory bodies for the financial services sector have made a bold statement that may help temper some of the excess, though ultimately their efforts may prove to be futile.

Elf and safety is no laughing matter

THE very words “health and safety” are enough to get eyes rolling and heads shaking. Few aspects of working life stir such ridicule and frustration. “Elf and safety”, as it has become known, is regarded as intrusive, bureaucratic and, in many cases, unnecessary. Few acknowledge that it has saved lives and limbs for thousands and improved working conditions across the nation.

Today marks the 40th anniversary of the Health and Safety at Work Act receiving royal assent, which placed a duty on all employers to ensure the health, safety and welfare of all of their employees. The British Safety Council says that since 1974 there has been an 80 per cent reduction in fatal injuries at work, though the decline of heavy industry and mining in that period must also have played a part.

The council notes that more action is being taken on health which has been overshadowed by safety issues. Like it or loathe it, expect more legislation.