BRITAIN’S banks are set to establish a new independent watchdog that will publish yearly updates on how much the public trusts them.
Sir Richard Lambert, in his latest report on restoring public faith in the industry, yesterday called on all banks to sign up to his proposed Banking Standards Review Council.
The six retail banks and one building society that commissioned Lambert’s report have already backed the idea, as have many business groups. However, “there is no consensus” among international firms with UK arms on whether to take part in the voluntary scheme, he conceded.
“Some of them are positive and want it to go ahead, others says this is a problem with UK retail and not for us,” he told City A.M. “But that’s not the case; the shortcomings occur across wholesale and retail and that’s what this outfit needs to cover.”
The first task for the new Council will be to appoint a permanent chair. A recruitment panel will be led by Bank of England governor Mark Carney and populated by luminaries “not from a banking background with an unquestionable integrity”, Sir Richard said.
The Council, funded by the member banks, will spell out each year which institutions are improving their “conduct and culture”, and will name firms it thinks fall behind.
SIX THINGS YOU NEED TO KNOW ABOUT LAMBERT’S REPORT
Banks asked for the report in response to Parliament’s commission on banking standards, which was set up in 2012 to restore trust in banking.
It proposes an independent Banking Standards Review Council, which will be funded by banks to the tune of £7m-£10m a year but will be independent.
The Council will publish yearly reports on which banks are improving culture and customer focus – though it will not replace the existing regulators, or handle complaints.
A panel will be set up to hire the Council’s first chairman. Other than Bank of England governor Mark Carney, no current or former bankers will be on this panel.
The new report dropped some earlier ideas, such as a Hippocratic Oath for bankers, or accreditation by the Council for all financial training courses.
The oversight of the Council will not extend to overseas operations – Lambert accepted this would not be practical given the global regulatory differences.