Prosecute individuals involved if banks break the law, say consumers

Eight in ten (78%) people think that where banks have broken the law, individuals should be personally prosecuted.Consumers also continue to have low confidence in the Government to handle the banking crisis effectively, with two-thirds (66%) saying the Government will not act in their best interests when implementing banking reform. This figure has not improved since Which? asked the same question in September 2011.

Eight in ten (83%) also think banking has got worse or stayed the same in the last year. Only one in five (20%) think that the Financial Services Authority (FSA) is effective in regulating UK banks.
The results show the scale of consumer distrust in the banking industry and a lack of faith in the Government and the regulator to clear up problems.

In a week that has seen two major banking institutions fail the public, from corruption at the heart of Barclays, to IT failure at Natwest, Which? is calling on the Government to scrap its existing timetable on implementing reform. Specifically we want over-powerful banks to be referred to the Competition Commission to consider their immediate break-up.

Which? says the banking industry should have a new professional standards body imposed on it, with individuals required to comply with a code of conduct like the medical profession, and individuals struck off for malpractice. And the Government should also start implementing the ring-fence between retail and investment banking as soon as practicable, and not wait until the banks’ preferred date of 2019.

Which? Chief Executive Peter Vicary-Smith said:
“Consumers are clearly fed up with one banking scandal after another. Banks and bankers will continue to be seen as untouchable unless individuals are held to account for their actions and the culture of banking is changed for good.

“The fines handed down to banks are not a deterrent. Last week Barclays was fined less than £60 million in the UK, compared to £231 million in the US, and has paid out £2 billion in compensation and settlements in the last three years, but that seems to have little effect.

“The Government needs to change the rules so that criminal prosecutions can be brought against individuals if banks have flouted the rules. We also want the banking sector referred to the Competition Commission immediately. More competition is essential to force a change in the culture of British banking.”

Which? is calling for urgent and immediate action to put trust and ethics back into the banking system. It is nearly a year since the Vickers Commission reported and we continue to see shocking behaviour in the banking sector with no obvious improvements in high street competition.

Which? wants the Government to:
• Refer the banking sector to the Competition Commission immediately to force changes so that high street banking delivers better products and services and has a culture that makes customers the number one priority.

• Change the rules so that criminal prosecutions can be brought against individuals – all the way up to board level – if they have presided over corrupt practices.

• Introduce legislation so that consumer groups can take collective action on behalf of consumers who have lost out financially from corrupt banking practices.

• Speed up its existing timetable for ring-fencing retail banking from the corrosive effects of the investment banking culture.

• Enforce professional standards and compulsory training for the banking industry.

Which? has this week already called for the FSA to investigate whether consumers have lost out financially from the Libor interest rates-fixing scandal, and if they have to make sure the banks compensate them properly. We have also demanded a change to how the Libor interest rate is managed in future as we do not believe the British Bankers’ Association is a fit and proper organisation to manage this crucial process.

Which? wants a strong regulator that stands up to the industry and promotes competition, an open regulator that tells consumers what it does, and a proactive regulator that acts on issues before they become problems.
Notes to Editor
• YouGov Plc conducted an online survey of 1035 adults between 28th and 29th June 2012. The figures have been weighted and are representative of all GB adults (aged 18+).

• TNS conducted an online survey of 1299 adults between 6th and 8th September 2011. The figures were weighted and representative of all GB adults (aged 16+).

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