Former head of the Conferation of British Industry Sir Richard Lambert has set out his final recommendations to set up a professional body tasked with improving the repuation of the UK’s banking industry.
The Parliamentary Commission on Banking Standards recommended last June that an organisation should be set up, independent of the banking industry, to boost standards in the sector. Lambert, also a former member of the monetary policy committee and a former editor of the Financial Times, was appointed to head up the body last June.
Lambert has today set out a “deliberately aspirational” plan to improve “the behaviour and competence” of banks and building societies.
Under the plans, the Banking Standards Review Council banks will have to publicly report on banks’ performance in a “programme of continuous improvement” in areas of culture, competence and customer outcomes.
It will meet once a year with senior representatives from larger banks and building societies to discuss whether they are improving over time and in relation to other firms. The body will have to make clear where particular sectors or institutions need to do more.
The report says: “This document is deliberately aspirational in nature. It is informed by the belief that the banking sector must voluntarily raise its game if it is to win back trust, and that there is a vital public interest in it doing so.”
Treasury select committee chair and former chair of the Parliamentary Commission on Banking Standards Andrew Tyrie says: “The Banking Commission concluded the creation of an effective professional body for banking was a long way off and may take at least a generation. The initial recommendations published by Sir Richard today represent a welcome first step towards that long-term goal.
“While this ambitious long-term project gets under way, wide-ranging reform is needed now on a number of fronts to secure improvements to standards. High on the list are reforms to banking remuneration—incentivising good behaviour, not bad—to corporate governance, and to regulatory supervision and enforcement. These reforms must be implemented as a package if trust in banking is to be restored.”
The report welcomed news from the FCA in March that all major retail banks had either replaced or made substantial changes to their sales incentives schemes that helped contribute to misselling scandals. However, it added: “There is still much more to be done in this area, and in others.”