Banks can’t be trusted to fix themselves

Following the final report from the Parliamentary Commission into Banking Standards (PCBS), Which? finds around eight in 10 (84%) people think the organisation overseeing professional standards should be independent of the banking industry.

Which? has found that, while more than half (53%) are confident the Commission’s recommendations will lead to positive improvements in banks, the vast majority (84%) of people still want to see a body independent of the banking industry oversee professional standards, and only 19% think the banks will be effective at delivering change in banking culture that will prevent future scandals.

Published last week, the PCBS report contained a number of recommendations designed to tackle the broken culture in banking. Our survey on the proposed reforms found:

·         Nearly nine in ten (85%) agree that criminal sanctions are appropriate for senior bankers who act recklessly; but

·         Less than half (48%) are confident the regulator will take appropriate action against senior bankers.

Another of the key recommendations relies on banks reporting any employee who has broken banking standard rules to the Financial Conduct Authority, yet we found half (48%) of the people we surveyed think it’s unlikely that banks will do this.

Which? believes the very banks that created the crisis of confidence in banking should not be left to make key changes necessary to restore consumer trust in the industry. Particularly when only a third (36%) of people think the report will increase their trust in the banking industry and four in 10 (42%) still think it’s unlikely banks will take appropriate action against staff who breach good banking standards.

Which? is now calling on the Government to drive lasting cultural change by amending the Banking Reform Bill to establish a fully independent code of conduct for all bank staff, which is backed by statute to give it real teeth. This should be overseen by a body that is independent of the financial services industry, similar to the General Medical Council (GMC) for doctors, and able to enforce tough sanctions on individuals that breach ethical standards.

Which? executive director, Richard Lloyd, said:

The Banking Commission’s proposals could signal the start of the big change in banking that consumers have been crying out for, but our research shows that more needs to be done to repair consumer trust in this essential service.

“Consumers have bailed out the banks and endured shoddy service, mis-selling and sky high charges for far too long. But while the report is tough on punishment, it is too weak on prevention. The culture in banks must change to prevent these scandals happening in the first place.

“To bring about the necessary cultural change, the Government must go further than the Commission and bring about a completely independent code of conduct and professional standards supervisor for bankers, like the GMC for doctors. As our research clearly shows, anything short of this will have no credibility with the public.

“We are calling on the Government to accept and implement reforms that help consumers without any further delay. We cannot afford to wait for a generation to see integrity and competition injected back into banking.”

Which? has been calling for a Big Change in banking to put customers first, not bankers.

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Notes to editors:

1           Populus, on behalf of Which?, interviewed 1,065 GB adults online on the 20th June 2013. Data were weighted to be demographically representative of all GB adults. Populus is a member of the British Polling Council and abides by its rules.

2          Nearly 135,000 people have pledged their support for ‘Big Change’ in banking with Which? and 38 Degrees. ‘Big Change’ is calling for:

·        Bankers to put customers first, not sales.

·        Bankers to meet professional standards and comply with a code of conduct.

·        Bankers to be punished for mis-selling and bad practice.

3          Other key statistics include:

·        Only 17% of people think the banks have got better in the last 12 months;

·        84% of people think the organisation which oversees standards in banking should be independent of the banking industry;

·        In October 2012 27% thought the Government would be effective at delivering change in banking culture and practices, but this has decreased to 22% in June 2013;

·        Four in ten (38%) aren’t confident that the proposed reforms will improve the culture;

·        Four in ten (43%) are not confident the reforms will prevent mis-selling;

·        Only three in ten (30%) say the report will increase their confidence that banks will work in the best interest of the customer;

·        36% aren’t confident the Commission’s recommendations will lead to positive improvements in the banks; and

·        Nearly two-thirds (64%) believe an independent body would be effective at delivering change in banking culture.

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