David Cameron's former adviser Steve Hilton says we need to rip up the banking system to promote competition

Stephen Dinneen
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Sunrise Over Canary Wharf - The European Headquarters Of Numerous Major Banks
Bankers' pay would be significantly restricted if Cameron's former adviser had his way (Source: Getty)

David Cameron's former adviser Steve Hilton has branded the banking sector a "stitched-up, corrupt cartel" that needs to be completely overhauled.

In an interview with City A.M.'s Bespoke magazine, Hilton, who this week declared his support for Vote Leave, labelled the industry chronically uncompetitive, and said that new regulations, such as America’s Dodd-Frank reforms, are making the situation even worse.

"Competition is the best form of regulation, much better than some of the fiddly regulatory schemes like Dodd-Frank that put such onerous requirements on banks that it actually drives out competition," Hilton said. "[We don't need] busy-body, macro interference by regulators who don't know what’s going on."

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He championed the "ingenious" idea by The Black Swan author Nassim Taleb that execs at banks that have been bailed out or "pose a systemic risk to the economy" should have their salaries pegged to their public sector equivalents.

Hilton, whose book More Human argues for greater decentralisation of power, added: "Those of your readers who are operating in oligopolies where they are protected from competition shouldn't get the benefit of risk-taking because they don't take any risks. Companies that are too big to fail are basically part of the public sector. I'm all for high-pay for true risk-taking entrepreneurs but it's not in the public interest to [pay the wages of] corporate bureaucrats who sit on top of companies that are there because they manipulate markets to keep competitors out."

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Asked if his ideas could lead to banks leaving the UK, Hilton replied: "Great! See you later! That's not going to happen."

The full interview will be published in Bespoke magazine on 9 June.

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