New UK banking standards body to be launched later this year

A new voluntary standards body for British banks and building societies will be launched later this year to 'raise standards and competence' within the sector.

 

Funded by the banks themselves at a cost of between £7m and £10m a year and relying on voluntary support rather than statutory powers, the new body will be set up as a 'champion for better banking standards'. It will be underpinned by a 'voluntary and aspirational' goal based on the credo that the banking industry must raise its own game in order to win back public trust.

 

Richard Lambert, former director general of the Confederation of British Industry and author of today's 'Banking Standards Review' report, is under no illusions about the difficulty (and potential controversy) that the new standards body will face in influencing the ethical standards of the same institutions that are providing its finance. According to the report, the new body will have to establish its credibility and independence from the start and 'will have to show that it is willing to set demanding standards, and to speak out when appropriate'.

 

Britain's biggest banks and building societies, namely Barclays, HSBC, Santander, RBS, Lloyds, Nationwide and Standard Chartered, pledged to set up the body in light of recommendations made by the Parliamentary Commission on Banking Standards last year amid a series of scandals involving benchmark interest rates, breaches of anti-money laundering rules and the misselling of complex financial products and loan insurance.

 

The new standards body will require participating institutions to commit to improving their culture and practices and publically report on their finances each year. Standards of good practice will be set, which may include whistleblowing procedures, staff values and behaviours and managing high-frequency trading.

 

At the end of his report, Lambert charts the future face of a banking utopia in 10 years' time and hopes that by then, 'balance sheets of banks doing business in the UK have been restored to health', more bankers have qualifications of one kind or another and 'politicians will have found other footballs to kick'.

 

Recognising the feat of the challenges ahead, Lambert does however concede that 'Realising this vision will require an enormous amount of heavy lifting by the banks and building societies in the years ahead, and by everyone who works in them. It will also require a different approach to their customers, and a much broader view of their role in society. But this is what the public has the right to expect. And it is what the country needs'.

 

Keen to build on and accelerate 'present momentum' on the issue, Lambert says that work to set up the new body should start immediately, with the next step being establishing an independent panel to appoint the new body's Chairman and approve the Chief Executive.