Government not doing enough to respond to bad bank behaviour
Government not doing enough to respond to bad bank behaviour, says Martin Shaw, Chief Executive of the Association of Financial Mutuals
For people to have trust in the financial services industry, they need assurances that the basic components of the system work. The FSA’s record fine of Barclays today is yet another demonstration that banks continue to treat consumers with contempt and are focused solely on making a quick profit regardless of the ethics or legality. The scandals over PPI, or failing IT systems look mild in comparison.
Independent research commissioned by the Association of Financial Mutuals earlier this year found that consumers trust financial mutual far more than plcs with their money. When asked to rank financial mutuals and financial plcs on a trust scale of 1-10, financial mutuals received a ‘Net Trust Score’ of +32%, compared to financial plcs, which registered -5%, clearly demonstrating that whilst a vast majority of people trust mutuals with their money, the same cannot be said for shareholder-owned companies, who people have lost confidence in as a result of the financial crisis.
The Government has already begun to take action to remove the worst aspects of the bonus culture, but it is not doing enough. Until it ensures the system works fairly and properly, the market will remain open to abuse. However, the root of the problem largely rests in successive governments standing by whilst markets became less competitive, less customer-orientated and more concentrated. The answer must be to act decisively to make financial markets more diverse, and that means taking positive steps to grow an effective, mutual alternative to the big banks.