Sants wishes bankers had been more honest

 

Hector Sants, who recently quit as the UK's top financial regulator, said on Wednesday that he wished "bankers had been more honest".

Speaking at the Said Business School, Mr Sants - who was chief executive of the Financial Services Authority from July 2007 to July 2012, and was an investment banker for most of his career - said that he did not mean that most of them had deliberately lied to him and his colleagues.

But he said that many of them were routinely "self-delusional" about the risks they were running.

Sants was participating in a debate on trust in financial markets (in which I was also a panellist).

Among the reforms he wanted to see to restore trust was the abolition of what he called "revenue-related incentives", or pay for bankers that is directly linked to the revenues they generate - to eliminate temptations for them to engage in bonus-generating deals that could turn out to be toxic.

The new chief executive of Barclays, Antony Jenkins, recently announced that branch staff would no longer have their bonuses dependent on the volume of financial products they sell. But many bankers continue to be rewarded for sales rather than the quality of the relationship with customers.

Mr Sants also advocated a new code of practice for the industry.

 
Robert Peston Article written by Robert Peston Robert Peston Economics editor

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  • rate this
    +14

    Comment number 15.

    No criminal prosecutions for fraud

    Miniscule fines for scamming their customers, often less than the actual profits from the scam

    I once worked in the industry, on the Trading Floor, right where the most sleazy things were going on. The belief was widespread that customers, regulators and pretty much everybody else were muppets

    Regulators, the BoE, Government and voters still prove them right

  • rate this
    +12

    Comment number 8.

    The financial system is of fundamental importance to any type of economic system.
    Recent evidence suggests that the national and international financial system is infested with fraudsters, operating in 'pools of sharks' located in the 'City' and Wall Street.
    Is it possible to create a decent political/economy while the criminals remain in post?

  • rate this
    +11

    Comment number 10.

    "Wishes"? He "wishes" they were honest?

    my nieces make wishes to the "tooth fairy" - it doesn't mean its true!

    What on earth have the regulators Sants and Lord Turner been doing all this time, let alone PAID for?

    Self-regulation, as with so many laws "absent" in our country, just doesn't work - people will do anything "so long as they don't get caught".

    Its a "game" to them!

  • rate this
    +9

    Comment number 13.

    I know that nationalized industries are normally expensive and inefficient entities. That said, privately owned banks have proved far more inefficient and costly, as sadly, the present crisis proves!
    I truly believe that a review of bank ownership is required and that a state owned bank is now a must! At least the people would then be able to hold failures to account!

  • rate this
    +9

    Comment number 5.

    I tend to agree. Removing financial incentives based on revenue or sales is the right way to go. Far better to reward long term stability and performance than short term statistics that are easily skewed, and evidently abused.

    But a greater question, and one that demands an answer, is why after four years and a mountain of evidence has so little been done to reform the system.

 

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