EVENTS of the past week – the Banking Commission’s report, the chancellor’s speech at Mansion House, and the departures of Stephen Hester from RBS as well as Paul Tucker from the Bank of England – have given us plenty to chew on.
These major announcements signal that we are entering a new phase for banking reform – and it is only right that we approach these changes in all humility, with a recognition that parts of the banking industry have to re-emphasise their relationships with society.
The UK needs – as the Banking Commission acknowledged – the right regulation to maintain an internationally competitive financial and professional services sector. It simultaneously needs to ensure that systemic risks are tackled through legislative and other forms of action.
This is a message we should all endorse. It certainly should not be seen as yet another example of banker-bashing. We need to find a common-sense approach to governance and regulation that involves working in the spirit, as well as of the letter, of any new standards framework. Rewarding failure is clearly unacceptable.
Of course, with these proposals on incentives, increased competition, accountability, and criminal sanctions, the devil will be in the detail. But the City of London is more than ready to facilitate a dialogue with policymakers on how to sensibly implement new measures.
Amid this focus on reform, it is important to reiterate that the majority of bankers have continued to live out high standards, the right ethos, and the right values. A small number should not, and indeed cannot, be taken for a far greater whole.
What’s more, a strong and stable banking sector plays a crucial role in creating jobs and growth across the country. Over 2m people work across the UK in financial and related professional services, with more than two-thirds employed outside London. Banking is a key part of this story. It is essential, therefore, that the industry and policymakers work in partnership to improve outcomes for customers.
While this is a complex challenge, it is important to pay attention to the volume of work that has already been carried out in recent years. The impact of recent reforms must be properly assessed before they are replaced in another overhaul. And what the banking sector – like any industry – needs is clarity and certainty from policymakers over the future shape it will be required to take in coming years.
One imminent change is the forthcoming departure of Sir Mervyn King from the Bank of England, to be replaced by Mark Carney. We look forward to working with the new governor, and other policymakers, to help ensure that the UK remains home to a successful, strong and competitive international banking sector.
Roger Gifford is Lord Mayor of the City of London.