Home  >  Our members  >  Member activity  >  Which? calls for banking overhaul

• Join us
  • Criteria
  • Member benefits
  • Supporter benefits
  • Fees
  • Funding and Grants
  • E-Networks
• Member directory
• Member activity
• Member support
  • Getting Started
  • Campaign communications
  • Case Studies
  • Glossary and Links
• Accreditation

Member activity

Which? calls for banking overhaul

The United Kingdom's Future of Banking Commission has today delivered its findings to the UK Government, calling for profound reform of the banking system.

The cross-party Commission* was chaired by Rt Hon David Davis MP and developed by Which? following a proposal from Rt Hon John McFall who, as Chairman of the Treasury Select Committee, wanted to ensure that the public had an opportunity to voice their opinions about the future of banking.

The Commission gathered evidence from regulators, consumer groups and business leaders including Mervyn King, Lord Myners and Lord Turner as well as executives from the UK's largest banking groups. However, what set it apart from past banking inquiries, was the evidence it took from consumers.

The Commission's recommendations aim to put ordinary people and society at the heart of a reformed banking system. They include reforms to the structure of banks so if they fail, depositors are protected; the introduction of new competition and regulatory regimes that make bank boards responsible for both meeting customers' needs and for their own solvency, and the creation of a healthy, professional and ethical culture in financial services.

Other recommendations by the Commission include:

 

• 'Living wills' detailing how the collapse of a bank would be managed and how customers would be treated
• Improvements to depositor protection including a new class of 'safe haven' accounts, which would only be invested in safe assets
• Restructuring banks so that if they fail, it does not cause catastrophic damage to their customers or the economy
• The separation of investment advice from the execution of trading
• That banks' boards, not regulators, should take primary responsibility for the management and stability of their banks
• Regulation should be used to increase competition among banks
• Senior executives to be rewarded for long-term business performance and shareholder return
• A step change in transparency, achieved by a combination of reform in the accounting rules for banks and credit rating agencies
• A programme of cultural change, which would see, amongst other things, banks cease paying sales commission to frontline staff

The Commission's recommendations will be delivered to 11 Downing Street, with the hope that they will shape the Government's policy on financial reform.

Rt Hon David Davis MP, chair of the Future of Banking Commission, says:

"Banks provide a vital service to the economy, without which no modern nation can survive or prosper. Nevertheless, fatal flaws in the structure, regulation and behaviour of the banks almost crippled the world economy in the last few years. The United Kingdom cannot afford to face such a crisis again. Nor can it afford to allow the fundamental weaknesses in its banking system to go on, precisely because the economy depends so much on an effective and efficient financial system.

"The Future of Banking Commission has considered in detail the root causes of these failures and proposes a range of reforms designed to improve the service banks give their customers. We have made recommendations to minimise the conflicts of interest inherent in banking, and to limit the liability of the taxpayer and thereby reduce the risk to the economy. We also propose a structure and regulatory regime designed to entrench a stable and competitive banking sector for the long term."

Which? chief executive, Peter Vicary-Smith, says:

"Banks can't be allowed to go back to business as usual. We must never again be faced with a situation where consumers pay the price for the failures of the banking system.

"A major change in the structure, operation and culture of our banks is needed if we are to rebuild the trust in our banking system that was so badly damaged by the financial crisis."

More information...

Read the Future of Banking Commission's report and find out more about the Which? campaign at www.which.co.uk/banking

*The Future of Banking Commission is chaired by Rt. Hon David Davis MP. Other members of the Future of Banking Commission include Rt Hon John McFall, Rt Hon Dr. Vince Cable MP (in his capacity as the Liberal Democrat Shadow Chancellor of the Exchequer), Philip Augar (formerly a Group Managing Director at Schroders' and now a writer on the financial services industry), Clare Spottiswoode (former DG of OFGAS), David Pitt-Watson (Chair, Hermes Focus Asset Management) and Roger Bootle (Managing Director Capital Economics) and Peter Vicary-Smith (chief executive, Which?). The Rt Rev Christopher Jamison was an adviser to the Commission.

Four evidence sessions were held to take evidence from bankers, politicians, business leaders and consumer groups and Which? held the Big Banking Debate to gather the views of consumers.

 

comments powered by Disqus