UK banks under threat from onslaught of conduct red tape

Tim Wallace
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BRITAIN’S banks’ credit ratings are at risk because of the tide of conduct regulation, fines and costs coming from the new watchdog, Standard and Poor’s analysts said yesterday.

The industry as a whole has a negative rating against it in part because of the threat of fines and compensation which is most well known from the PPI scandal.

Analysts said the “more litigious and prescriptive regulatory environment is here to stay,” imposing new costs on banks as they make sure their staff do not break the rules.

It may also hit incomes as sales staff moderate their behaviour.

And more fines and compensation payouts could be on the way, as the Financial Conduct Authority appears tougher than its predecessor. This hangs over the sector and so creating uncertainty for investors, the analysts said.

“In many cases ‘one-off’ charges arising from past compliance failures and other operational risks are continuing to undermine reported earnings,” said Nigel Greenwood, a director at the agency.