Proposals for a new Banking Standards Review Council (BSRC), that will be funded by the UK banking industry, have been accepted by British banks Barclays, HSBC, Lloyds, RBS, Santander, Standard Chartered and Nationwide, the BBC reported on Monday.
Sir Richard Lambert, the former chief of the UK independent employers’ organisation the Confederation of British Industry (CBI), was asked to set up the banking standards body by Britain’s largest banks following scandals in the industry that included the rigging of benchmark interest rates, breaches of anti-money laundering rules and the mis-selling of loan insurance and complex interest rate hedging products. Lambert will reportedly serve as the BSRC’s interim chairman, while Bank of England governor Mark Carney will lead a panel of “respected figures” from outside the industry that will appoint a chairman of the BSRC and ratify the appointment of its chief executive later this year.
Lambert was cited as saying: “Rebuilding confidence and trust in the banks is especially vital in the UK, because of the size of the banking system and the importance to the economy of London’s role as an international capital market.”
Membership of BSRC will be voluntary and banks involved in the programme will self-report to the BSRC. The criteria for better banking standards in the UK includes staff competence, the culture within the bank and the effects of banking practice on customers. However, the BSRC will not have the power to independently verify the banks’ reports or impose any sanctions on banks or individuals.
According to reports, the BSRC will be funded by the banks at a cost of between GBP7m and GBP10m annually. The organisation intends to publish a full report on the “state of banking standards and good practice” in the first half of 2015 and is expected to publish its first full annual report in 2016.
In response to Lambert banking standards review, CBI Deputy Director-General Katja Hall commented:
“With the UK economic recovery gathering momentum it makes sense for the regulatory focus to concentrate on how banks can best serve their customers, especially entrepreneurial growing businesses, which need their support.
“Sir Richard’s recommendations for banks to commit to driving continuous improvement, with transparent public reporting, alongside new good practice standards, are a sensible way forward. “With the political and regulatory spotlight now firmly on conduct, a swift and positive response from the banks to these proposals, combined with changes already underway, should help to rebuild trust in this important sector over time.
“In addition, with more new players entering the banking sector, and competition hotting up, good customer relationships are a real competitive advantage for banks.”