#Banks …not passing GO! – just yet..

From No More Excuses

Rounding up the strays..

It has taken a long time, and the cynic rightly can say that they were pushed into doing it. Either way it was going to happen, be it by this Government or the next – or probably worse, by Europe…which is going to clamp down anyway! Nevertheless, a report by the Parliamentary Commission on Banking Standards has still had its critics. Primarily from the banking sector and die-hards whom have never had it so good! Set up to investigate the LIBOR scandal, it pretty well has enveloped the ails of ‘banking’ in general – let’s face it… it would be hard not to!

The simple answer however, and this has taken over a year to bring together, is not exactly that simple. It is a good promissory band-aid for those demanding blood and at the very least ‘Stocks’ at every corner of the square mile. Form an orderly queue please!!


The problem 

Too many bankers, especially at the most senior levels, have operated in an environment with insufficient personal responsibility. Top bankers dodged accountability for failings on their watch by claiming ignorance or hiding behind collective decision-making. They then faced little realistic prospect of financial penalties or more serious sanctions commensurate with the severity of the failures with which they were associated. Individual incentives have not been consistent with high collective standards, often the opposite.” – to quote the Committee’s report, actually sounds quite tame considering the length and breath of their considerations.

It is though, in my view, pound for pound very logical. Moderated by some of the press from the embargoed release, yet pounced upon elsewhere. This quote [below] however sets the tone;

“Banks in the UK have failed in many respects. They have failed taxpayers, who had to bail out a number of banks including some major institutions, with a cash outlay peaking at £133 billion, equivalent to more than £2,000 for every person in the UK. They have failed many retail customers, with widespread product mis-selling. They have failed their own shareholders, by delivering poor long-term returns and destroying shareholder value. They have failed in their basic function to finance economic growth, with businesses unable to obtain the loans that they need at an acceptable price. ”

Ultimately, they did reach various conclusions on how it is perceived how matters should proceed. Phrased as such the whole is more likely to be received in the ‘House’ with full cross-party support. In many ways, I’d love to see much – if not all of this – made retrospective for all those whom have been so cruelly wronged by those and their actions, and for the domino effects it has had . However this snap-shot of their thinking – particularly the latter which attracted the headlines – is a move in the right direction.

“The Commission envisages a new approach to sanctions and enforcement against individuals:

  • all key responsibilities within a bank must be assigned to a specific, senior individual. Even when responsibilities are delegated, or subject to collective decision making, that responsibility will remain with the designated individual;
  • the attribution of individual responsibility will, for the first time, provide for the full use of the range of civil powers that regulators already have to sanction individuals. These include fines, restrictions on responsibilities and a ban from the industry;
  • the scope of the new licensing regime will ensure that all those who can do serious harm are subject to the full range of civil enforcement powers. This is a broader group than those to whom those powers currently extend;
  • in a case of failure leading to successful enforcement action against a firm, there will be a requirement on relevant Senior Persons to demonstrate that they took all reasonable steps to prevent or mitigate the effects of a specified failing. Those unable to do so would face possible individual enforcement action, switching the burden of proof away from the regulators; and
  • a criminal offence will be established applying to Senior Persons carrying out their professional responsibilities in a reckless manner, which may carry a prison sentence; following a conviction, the remuneration received by an individual during the period of reckless behaviour should be recoverable through separate civil proceedings.”

For the full report, and it is worth reading even though lengthy. Here is the link. Parliamentary Commission on Banking Standards – Fifth Report. Changing banking for good.


Easy Money’

There’s no such thing…

The report has covered virtually all the evils of recent years, and looks towards the future such as portability. Basically matters which have been broached by Basel I, II, III. In themselves weighty tomes and caused much disapproval from the banking sector. Quite honestly, tough. These changes slowly being effected across Europe will make Banks stronger, but more importantly safer for the general public. There is one thing I would still advocate irrespective of all this.

Quite simply there is and will always be a need for a Basic Bank Account available for all. This report – although not mentioning it directly – brings this closer. Already many banks are realising this with some introducing varied types. If there is to be a restorative feeling towards ‘Banks’, the report in itself is no panacea. It does though point towards getting it right, and that will take time.

A major realisation will be the splitting of the banks into retail and investment.

Regardless of this though are those still bitter memories of the frauds allegedly [required] committed by those who rigged the Libor rate. It affected everybody and virtually every product on the market. Quite unbelievable. As were the shenanigans of the RBS. Committed in the investment arm of banking yet using the ‘whole’ to back up its mis-judgements. The act of Governments to bail-out this…AND reward failure with commendations, bending over backwards to accommodate such, leaves a very sour taste in the mouth. In mine and those who still believe in values and honesty.

What however cannot be accounted for is, indeed are, the woeful and multi-various forms of economics employed by Governments worldwide. Add that to self-defeating exercises in accountancy domestically, it is no small wonder we are where we are.

As a ‘bean-counter’ myself, this is painful. And I like to consider myself one the good guys!

One thing being addressed but under different banners are the mindless idiocies of Pay-Day Loans. If Usury isn’t brought back to statute I’ll be astounded. And yes, you can blame the attitude and happenings of banks for this to accumulate at the speed it has.

Not that there aren’t other factors involved, of course, but one thing sparks another. AND this isn’t a new phenomenon, all that’s happened is the ‘Loan-Shark’ has grown up so to speak. The original still exist, just at a lower and more menacing level. Some operate under every day household names, get featured on TV for dubious tactics…YET STILL… are permitted to ply their trade.

Selling off the family silver as we did, still do… never was the answer, never will be. Likewise, bailing out banks and to sell them back, again, at a loss, is plain bonkers. Sure new investors would love it, it’s a bargain! Not though for the original investors or the public purse. Wake up Britain! Wake up Chancellor, whatever your political colour!! First, bring these recommendations in as soon as possible in this session or next. Do not water them down. Last chance saloon, again, it appears!