A new standards body for British bankers will be launched this year, with a chairman appointed by an independent panel led by Bank of England governor Mark Carney.
Richard Lambert, a former director general of the Confederation of British Industry, who was tasked with setting the body up, said the Banking Standards Review Council (BSRC) would be a champion for better banking standards in the UK.
“Rebuilding confidence and trust in the banks is especially vital in the UK, because of the size of the banking system and the importance to the economy of London’s role as an international capital market,” Mr Lambert said today.
Britain’s biggest banks pledged to set up the body last year after the industry was hit by scandals including the rigging of benchmark interest rates, breaches of anti-money laundering rules and the mis-selling of loan insurance and complex interest rate hedging products.
Mr Lambert was asked to come up with proposals for the organisation by the chairmen of Britain's five biggest banks - HSBC, Barclays, Lloyds Banking Group, Royal Bank of Scotland and Santander - and its biggest customer-owned lender, Nationwide.
The BoE’s Carney will chair a “panel of respected figures” from outside the industry set up to appoint a chairman of the council and to ratify the appointment of its chief executive.
“I encourage all banks that operate in the UK, both domestic and foreign to support this endeavour. We need a financial system that is safe, fair and acts with integrity,” Mr Carney said.
Mr Lambert will serve as interim chairman until a permanent appointment is made.
The new body will require participating banks to commit to improving their culture and practices and to report back on their performance to the public each year.
It will set standards of good practice that may include whistleblowing protocols, processes for handling small businesses in distress, dealing with conflicts of interest in capital market activity and managing high-frequency trading.
The council will publish an annual report setting out where progress is being made by the sector and by individual banks, and what more needs to be done.
“With the political and regulatory spotlight now firmly on conduct, a swift and positive response from the banks to these proposals, combined with changes already under way, should help to rebuild trust in this important sector over time,” said CBI Deputy Director-General Katja Hall. (Reuters)
