Banking
In recent years, we have seen a massive financial meltdown due to over-lending, over-borrowing and poor regulation. The Government believes that the current system of financial regulation is fundamentally flawed and needs to be replaced with a framework that promotes responsible and sustainable banking, where regulators have greater powers to curb unsustainable lending practices and we take action to promote more competition in the banking sector. In addition, we recognise that much more needs to be done to protect taxpayers from financial malpractice and to help the public manage their own debts.
- We will reform the banking system to avoid a repeat of the financial crisis, to promote a competitive economy, to sustain the recovery and to protect and sustain jobs.
- We will introduce a banking levy and seek a detailed agreement on implementation.
- We will bring forward detailed proposals for robust action to tackle unacceptable bonuses in the financial services sector; in developing these proposals, we will ensure they are effective in reducing risk.
- We want the banking system to serve business, not the other way round. We will bring forward detailed proposals to foster diversity in financial services, promote mutuals and create a more competitive banking industry.
- We will develop effective proposals to ensure the flow of credit to viable SMEs. This will include consideration of both a major loan guarantee scheme and the use of net lending targets for the nationalised banks.
- We will take steps to reduce systemic risk in the banking system and will establish an independent commission to investigate the complex issue of separating retail and investment banking in a sustainable way; while recognising that this will take time to get right, the commission will be given an initial time frame of one year to report.
- We will reform the regulatory system to avoid a repeat of the financial crisis. We will bring forward proposals to give the Bank of England control of macro-prudential regulation and oversight of micro-prudential regulation.
- We rule out joining or preparing to join the European Single Currency for the duration of this agreement.
- We will work with the Bank of England to investigate how the process of including housing costs in the CPI measure of inflation can be accelerated.
- We will create Britain’s first free national financial advice service, which will be funded in full from a new social responsibility levy on the financial services sector.
- We take white collar crime as seriously as other crime, so we will create a single agency to take on the work of tackling serious economic crime that is currently done by, among others, the Serious Fraud Office, Financial Services Authority and Office of Fair Trading.
Bankers bonuses and salaries should be curbed, and also along with international partners. This we need to pay the right money to get the best people approach has got to stop. If that was the case why are we in such a mess?
The banks caused this crisis nand should be at the centre of paying for us to get out of it. All British banks should be nationalised so that their profits can be used for the good of the country. Minimal bonuses if any should be paid. Workers in the public sector and a lot of private sector workers don’t get bonuses. They are paid to do their job and do it
Force a Tobin tax through please.
The bank levy needs to pay for all the insurance costs incurred by the government.
I suggest increasing the charge on every share transaction by a tiny amount to generate a substantial amount of money from the City.
I trust that the governments shares in the banks will be sold when prudent to do so ie. when the share price far exceeds the level at which the government invested.
If you restrict bonuses to bankers they will do their business from somewhere else. When I worked in banking before my retirement eight years ago, 75% of the bankers bringing in business were foreign nationals. if you make the UK unattractive from a bonus perspective the international banks will place their bankers in a more attractive environment and their revenues will go elsewhere.
The banks need to pay for the bailout. And we need to make sure banks are nver bailed out again by separating high street and investment banking.
I dont care how this is done, whether the banks that were nationalised remain so or not. But they need to pay back the tax payers.
Having been a victim (totally accurate term) of the bank charges scandal I’d like to see some sort of mechanism for making the charges
a) clearer (I kept on thinking I’d paid the charges only for new ones to appear from months ago, which of course then puts you back into the unauthorised overdraft and causes more charges etc)
b) easier to pay, or set aside as a fixed fee to stop the rolling charges effect – I don’t mind paying for the missed direct debit, but do mind paying again and again…
c) what would be nice is an immediate ‘charges account’ as soon as a charge is made that I can pay off, but not get stung over and over and over for. it really is a evenue stream that takes advantage of the less well off or less well able.
(and Barclays £11 billion profit didn’t appear out of thin air – they made most of it from skimming off the taxpayer’s injection of cash into the system… so why are they being allowed to keep so much of it hmmmmmm????? MR CAMERON??? lol)
Good, I like all you have proposed here, especially the separation of retail and investment banking. But you need to do this quickly, thoroughly, and permanently or people will lose faith in the coalition, which is – I think – the best thing to happen to British Politics since the last time in the 1939-45 war.
Well done.
As someone involved with a small UK bank I welcome proposal 4 to foster diversity, encourage mutuals and competition. However I would urge the government to consider how current regulatory policies and proposed taxation policies will impact on smaller institutions. My experience indicates that although most of such smaller community-oriented banks and building societies have behaved responsibly, pay no large bonuses, pose no systemic risk and have needed no government support in the recent crisis they have been subject to a ‘one size fits all’ regulatory approach which unnecessarily restricts their ability to continue lending. Little account is taken by the FSA of specific evidence relating to the performance of individual institutions in making regulatory decisions. Changing who regulates will make little difference to these institutions if there is no change to how they are regulated. As these institutions generally also rely on retained profits to increase their capital base and future lending capacity any additional bank tax will simply reduce these retained profits and so reduce their ability to lend.
The UK and ideally the rest of Europe , the US should cease trading with companies registered in tax havens. Their owners often live here without paying for our civilised environment. They just export our Quality of Life to their tax havens.
bankers do a good job for the economy but theyd o a job and no job is worth the obsene bonuses they receive. There are lots of other jobs jsut as essentail to the running of the country even the menial ones are important but these dont get bonuses. Lets get things in perspective,,ok some bonuses are ok but not the ridiculous ones they get that help inflate prices of housing and so on in south eat especially.
You’re tarring all the banks with the same brush. Some of the banks were to blame but not all of them.
The top people get paid top money as in any private company.
I get a bonus and why not as it’s part of my reward package. It’s not a massive bonus like some of the traders get but I didn’t casue the problem so why should I suffer? another knee jerk reaction from people who don’t work in the industry. Banks bonuses aren’t all bad and only a few percent gets big money.
If the bank bosses screw up then they should be accountable.
Did the banks force people to spend spend spend? No-one put a gun to their heads and made them sign credit documents.
Regulate the ratings agencies and give regulatory power back to the Bank of England.
Easy!
The UK and other Banks are to blame for UK’s debt problem and in future all Banks should be forced to pay back Tax Payers money. Also, big bonus paid to Bank bosses should be stopped or heavily taxed to disencourage big bonus practices through the UKs Bank and other Private Sector.
The Banks must take responsibility for their irresponsible lending. An insurance tax on riskier ventures should be considered.
Europe should also agree on tax levels to prevent flight of companies and individuals to pay less tax i.e. close down Jersey as tax-haven. Change the rules for those who seek to ‘work’ her but not ‘live’.
Spend more money on specialists in the HM Customs and Excise to stop big business using loopholes to avoid the £billions being lost to creative accountancy!
The banking levy will cause swift movement of the industry from the UK to tax havens like the channel islands and Switzerland. This levy needs to remain effective, yet small.
If you want to cut the bonus’s, you will also cut effectiveness and competetiveness along with it.
Banks should be run by bankers not Investment Bankers (a very different breed), grocers or executives from other industries,
Having spent some time in Banking (and created an organisation intended to educate bankers about sensible lending on commercial property), I can say that problems arise from too much competition, not too little. It lowers standards and forces banks to take greater risks to match the profitability of their competitors.
Nevertheless, I applaud the creation of competition that has different priorities and philosophies from that of many existing banks.
Education and training in banks needs to be improved considerably.
I have many ideas for reform, which – if welcome – I will present in another forum.
You need to consider the problems faced by savers. Labour have single mindedly concentrated on those who got themselves into debt to the great cost of savers. I appreciate that everybody wants to be an exception when it comes to contributing to paying off the deficit BUT, savers are the responsible ones who are preparing for their futures, so they do not become a drain on the state and do not call on government hand-outs. At the moment there is absolutely no incentive to save as any savings immediately start to lose value. Better to spend it all but maybe require government hand-outs a bit later.
Keeping interest rates low despite the massive inflation can only be for political reasons (aster high inflation for so long) – helping those in debt. BoE Base rate needs to increase (which will not directly impact the deficit. similarly, tax concessions for investment/savings needs to be looked at. Of course that will decrease tax revenue but without such measures the bill in a few years as people start retiring without savings and without having prepared will be a disaster.
Any reform of the banking system would be a start.
The unbridled short term greed of the banking system has lead to the worst economic crash since before the war.
The lack of checks and controls of the system have stimulated a world wide game of financial brinkmanship, with each bank trying to out perform each other in what has proved to be nothing better or more secured than bluffing at poker.
and yet.
They continue to post profits that they congratulate themselves on, pay shareholder dividend and obscene levels of salary and bonuses. The nation states that have bailed them out have not been paid back. The economic collapse their greed initiated and the levels of national debt required to support the banks, the homeless through repossession and the growing numbers of unemployed has financially crippled much of the world.
We then have the stupidity to listen to those same financial institutions as their departments “Credit Rate” our countries and demand that we put our financial house in order. Irony isn’t in it.
Banks used to be about security and long term investment. They have become rapacious gamblers and card sharks. They need controlling and regulating, and not by themselves or organisation made up of bankers. They have reached a stage where they are destroying nation states and negating democracy. We own several of them, and yet have seen no benefit in doing so. We bail them out, they don’t pay us back and yet they pocket their profits once again. If our friends did that we’d disown them or take them to court. It’s time to do that with the banks.
I do not authorise you to use my contribution to revenues to pay the banks and individuals excessive salaries, bonuses, nor ‘bail-out’. As you state you wish to support peoples opportunity to achieve their potential and social mobility then offer opportunities for the people who run banks and building societies ‘on the shop floor’ We may experience some moral behaviour for a change, The present high-fliers whose greed put us into this situation can either become answerable and on a reasonable salary or leave, They have black-mailed us long enough and to pander to them any longer is a betrayal to the electorate especially tax payers , I expect you to hear us and be accountable
I would like to see all major banks offer an ethical account… an account in which the bank behaves more like a credit union than a ‘high street bank’… where the account holders can have a say in what the bank loans to and invests in, so account holders money is not going towards something they wouldn’t otherwise agree on.
I have recently completed a career in law enforcement and have a good grounding in fraud investigation. The amalgamation of the SFO, OFT and parts of the FSA to create an Economic Crime Agency are to be welcomed. What it will lack are policing powers and any proactive policing capacity. If the aim is really to make an impact at low cost, them the amalgamation of parts of SOCA that have a policing capacity would really have a a huge effect. They already collect all financial suspicious activity reports (SARS) and all four together would make a natural fit.
Without the inclusion of SOCA, all you will have is a forensic accountancy unit with no teeth. The SEC in the USA have a hard core of experienced law enforcement officers and are feared by white collar criminals. There would be huge savings and you would make a real contribution to combatting white collar crime. They need the power to actually arrest people without direct Police involvement. Put an experienced former POlice Officer in charge. Allow a higher percentage of seized assets to be returned to the Units that obtain them. Law enforcement could be virtually self funded as in the USA Take a chance for once and allow some autonomy.The Treasury takes to high a percentage which actively deters enforcement action.
Best wishes!!!!
Can someone please explain to me why when we had a crisis caused by wreckless bank lending, a market driven by greed, why is it that the public sector will pay the most for this. The banking sector should pay their fair share, there should be a new tax in the banking sector,
There needs to be some ethics driven banking, if the point of capitalism is to make more and more money then this crisis will happen again, capitalism needs to develop a soul, The banking sector should be judged on other ethical criteria, such as green investments and other “good” causes rather then being just about making ever more money. Not sure how this can happen.- Possibly giving incentives for ethical investments eg for things like rebuilding society, green ventures etc,. This capiutalistic ethos that we are in is driving our soul-less and broken society
Levy on all bank profits, they got us into this mess and need to be held accountable.
Bonuses for bankers are grotesque, and given the massive injection of public money into the system to stop it collapsing, the response of government has been pathetic. The government needs to take a MUCH stronger supervisory role over the banking industry, and stop swallowing the tired old line that banks rely on to avoid regulation.
What other sector awards itself such largesse? And for what exactly? Casino banking MUST be reined-in NOW. In every other sector, people work hard to ensure their jobs stay secure through competitiveness or efficiency. I see no evidence that the banking sector is robustly-efficient, let alone that its gambling fever is beneficial to the country.
It is said that if senior bankers were not granted bonuses, they would depart to countries that DID allow them. Given the horrendous scale of the recent financial meltdown caused by the greed and lack of restraint of senior bankers, as well as the lack of effective supervision by government, my response would be “go ahead”.
The Post Office is a ready-made, trusted, accessible network which is crying out for a new role and proper investment. It should be converted into a people’s bank to give access to banking services for all.
Anything on bonuses?
I run a charity and could run three youth centres and nine staff on one bankers bonus!! what is fair about that? we need explaining to us why they are still getting bonuses when everyone else is getting cuts and they are the ones whoo got us into this mess! Also the taxpayers bailed them out, we dint grant them our money to feather their pockets!
Dear Thinkers,
Why is it that banks can without penalty ask a company to reduce its substance, when the ask for more interest on the monies loaned, than the company is earning,
When a company [or the state as such] increases its productivity, or net profit after investment in the company, by just 2% then it is impossible to pay 8 or 10% interest, without reducing the substance( e.g. buildings, machinery, safe-guard-funds, making personel redundant, reducing research, pension contributions and the rest of it).
Taking 2% as 100 then 8% respresents already a 400% increase.
I havew always thought that extortion {usually thought to be 30% or more} is punishable by law. Can you enlighten me, why this is not punished?????
I consider this especially in the light of the astronomical debts of developing countries, which in this way are hindered, if not stymied, in their development. So a return to the facilities, which were granted for GErmany, Austria during the ERP-Credit of the European Restructuring Project after WWII, for the developing countries, would help democracy in these countries enormously.
I believe we have allowed banks to create financial products and trading systems that are no longer to the benefit of society; but simply to the bank employees, shareholders and owners. We have allowed our money system to be hijacked. Banks create money as loans that have to be paid back with interest and they then multiply that money and create spectacular risks with meaningless investments. The government should take away the ability to create the money supply from the banks and return it to the people in the form of a government bank. Interest should be charge to borrow money at reasonable rates and the interest should go directly to the government; the government will have more money to spend and lend and begin to be self financing instead of depending on debt. The fact that the government has been drawn into massive borrowing is as much a consequence of the illusion that consumer growth can create real wealth; it has been a temporary bubble that needs to be corrected. Face up to the banks now; change the rules; bring money creation back into the power of the government on behalf of the people. If we don’t do this the financial industry will roll on degrading our wealth making the western populations of the world into slaves much as many of the rest of the world already are. We have seen the warnings over the last years; and the day will come when its too late; wealth creation should be created, sustained and valued not gambled away by the few on behalf of us all. Think out of the box.
what is the goverment doing so that we get justice for the bad crop of bankers and their practices who caused this financial mess that we are now in?
i call on the goverment to introduce the financial transaction tax F.T.T which somebody else mentioned to help the most vulnerable peaple in the world-a good idea!
Deal with the running sore and gross unfairness of Shared Appreciation Mortgages sold in 1997 by the Bank of Scotland which is now a largely state owned bank, The victims of these totally unfair loans cannot get a hearing of their complaints either by the FSA or by the courts and now their only hope to get the issue dealt with by a government which claims to be committed to fairness.