Bank of England head says banks must change culture

 

Sir Mervyn King: "Something went very wrong with the UK banking industry and we need to put it right"

Bank of England governor Sir Mervyn King has called for a change in the banking culture, saying that customers have received "shoddy" treatment.

He added that bank leaders had "let down" the many honest and hard working people in the financial sector.

Sir Mervyn's comments come on the day banks were found to have mis-sold financial products to small businesses.

It is the third major scandal this year, following manipulation of lending rates and loan insurance mis-selling.

Speaking at the launch of the Bank's twice-yearly Financial Stability Report, Sir Mervyn demanded immediate and far-reaching action to reform the structure and culture of the UK banking industry.

He said: "That goes to both the culture in the banking industry and to the structure of the banking industry, from excessive levels of compensation, shoddy treatment of customers, to deceitful manipulation of one of the most important interest rates and now this morning to news of yet another mis-selling scandal.

"We can see we need a real change in the culture of the industry. And that will require two things. One is leadership of an unusually high order and changes to the structure of the industry."

Start Quote

As well as ripping off their customers, they have also harmed the reputation of business as a whole - they should feel deep shame for the damage they have done”

End Quote Simon Walker Institute of Directors
'New blood'

His comments were echoed later by the Prime Minister, David Cameron, who said at the EU summit in Brussels: "British people are crying out for a return to good old-fashioned banking... and not put that at risk by big investment banking.

"That's why the governor is so in favour of changing culture at the banks and so am I."

Criticism from business leaders is also growing, with the head of the Institute of Directors (IoD), Simon Walker, saying in a statement: "As well as ripping off their customers, they have also harmed the reputation of business as a whole - they should feel deep shame for the damage they have done."

The IoD said there should be a clear-out of leadership in many of the banks and "new blood" brought in.

Banks have been under fire this year for:

'Let down'

There have been calls from some politicians for UK banks to be investigated in the same way as Lord Justice Leveson is looking into the media.

However, Sir Mervyn said a Leveson-style inquiry was not necessary, as the wrongdoing was plain.

"We don't need any inquiry to know what we should be doing. There must be many people who work in banking today who know that they are honest, hard-working and feel they have been let down by some of their colleagues and indeed their leaders."

He went on: "What I hope is that everyone - everyone - now understands that something went very wrong with the UK banking industry and we need to put it right."

He called for the government to implement the recommendations of the Vickers Commission on banking, which said that more risky investment banking should be separated from day-to-day banking needs of individuals and small businesses.

 

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  • rate this
    +1

    Comment number 1460.

    Very rich of Mervyn King to blame everyone else but himself. If something needs to be put right, then you need a change of personnel at the Bank of England to do so. Not someone who is inextricably part of the problem.

  • rate this
    +42

    Comment number 979.

    It's not just customers that have suffered in the banks' rush for profit at any cost. A long standing, now redundant, former employee who raised concerns about an ill considered but lucrative new mortgage product, and was told "Your job is to implement Policy Decisions made, not question them." I lost 5 years salary/pension entitlement. There aren't many Lending Manager jobs for 55 year olds about

  • rate this
    +20

    Comment number 951.

    Yes true people have been asking for change many years now!
    All of a sudden up pops King, These lot knew about this years ago and was just waiting for the uproar of the people. Now they can put something in place that was worked on for this very moment.
    Lets wait and see what comes up shall we probably be even more shoddy than we have now lol

  • rate this
    +32

    Comment number 837.

    With great power comes great responsibility, the bankers do have the power and they are many who have been abusing it, yes people do try to avoid tax but the small man has always ended up being fined etc but its about time the people with the power paid for their behaviour whether that be financial or jail. In every industry there are good and bad people but its about time the bad were punished.

  • rate this
    +29

    Comment number 832.

    High Street Bank Managers have very little autonomy these days. If the computer says no then that is it. I have banked with the same bank for nearly 30 years and when I have had difficulties little assistance has been offered. I also have my business account with the same bank and they have offered no assistance of late either. I feel very let down by them and I have never let them down.

 

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