VE shocking news. Banks aren’t popular. In fact we are about the most unpopular industry in the UK, according to detailed new YouGov research. But what I find most interesting about the poll is how it demonstrates the scale of the challenge we face in convincing customers that banks are reforming their practices – as the public demands.
The top demand (cited by 69 per cent) is capping bonuses and pay. Unknown to many, cash bonuses are down 77 per cent and the total bonus pool has more than halved since 2007. That’s before the EU imposed its new bonus cap that comes in next year.
The second (65 per cent) is making banks more transparent. We need to make more of the data we publish – not only detailed statistics on lending to individuals and businesses, but also on bank pay, including the actual pay of the highest earners, and the numbers earning more than £1m.
The third demand is for bankers to be professionally trained. Agreed: the British Bankers’ Association has made proposals for a banking standards review council to set, monitor and uphold professional and ethical standards, and the Parliamentary Commission on Banking Standards is also set to push in this direction.
Fourth is for rules stopping banks from taking on too much risk (e.g. ringfencing). This is timely: only this week, the Capital Requirements Directive (CRD IV) was passed, further raising capital standards. Meanwhile in the UK the Vickers ringfencing proposals are going through Parliament.
Fifth is making it easier for homebuyers to get mortgages – just as the Council of Mortgage Lenders reports this week that first-time buyers are returning to the market, thanks to fresh thinking by banks and the Funding for Lending Scheme."
Sixth is forcing banks to lend to small businesses. Around £6bn a month in new lending goes to small firms, and eight in ten applications for credit are approved. Arguably the biggest barrier to greater borrowing by SMEs is confidence.
Seventh is protecting taxpayers from bank bailouts. There is unanimous agreement on this: no bank should be too big to fail, nor call on the taxpayer for support. This is the priority for policymakers and the driving force behind many reforms.
Eighth is getting banks to hold more cash to make them more stable. Big strides have been made in this area: in the UK, capital levels are up five fold since the crisis, and tougher capital rules are also coming in.
Ninth is new rules to make it easier to switch bank accounts. This is coming: from September, seven-day switching of accounts is going live and should make this hassle-free.
Tenth is sacking the bosses. Since 2007, 90 per cent of directors and senior management at our major banks have changed. Such a regime change is unprecedented in any industry.
This poll confirms things we all know: people are angry with banking and there needs to be real change. It should also be a wake-up call to those of us involved in the debate, that we must do more to show people we understand why they are angry, and to show through our actions that the industry is improving for the better.
Anthony Browne is chief executive of the British Bankers’ Association.