Sir Richard Lambert’s plans to improve banks’ behaviour are only the latest in a long series of proposals – and the tide is continuing, with some banks expecting his ideas to be replaced with new rules in the coming months.
The first phase of the financial crisis was focused on the stability of the financial sector. Bailouts were followed by rounds of private recapitalisations, and proposals to restructure parts of the sector.
The first big proposals to improve the culture and standards at banks came in the Vickers report in 2011, also known as the Independent Commission on Banking. Vickers proposed structural changes, with the retail and investment banking units of lenders separated by a ring-fence.
In part this was designed to make it easier to resolve some parts of a failed bank, while protecting individuals and small business customers. But it was also designed to keep the cultures of the two separate.
Then came the Libor-fiddling scandal in the summer of 2012, which led in turn to the Parliamentary Commission on Banking Standards. This was focused more intensely on culture and behaviour at banks, and one of its solutions was a professional body to police bankers and keep behaviour in check. But it also pushed for tougher regulation, including the threat of jail for bankers who behave recklessly and contribute to the collapse of a bank.
Next up is the Bank of England’s fair and efficient markets review, which will look more closely at behaviour in the wholesale and investment banking markets. Some banks believe this could end up replacing parts of Sir Richard Lambert’s plans.