Why we have no time for “Banker Immunity”.

robbery

 

We have not seen bankers marched in handcuffs from their desks but now it seems we might.

The regulators have put-out a consultation paper that seeks to pin accountability on Directors (including non-executive Directors). A good friend of mine is a non-exec of a major British Company and I very much hope she will remain one. If she feels she is presiding over a criminal enterprise she should resign and whistle blow. If she is working to put that organisation right (which I think she is) then her actions must be unimpeachable. But if she is complicit in criminality, she should face criminal prosecution.

Bankers claim that this proposed regulation is a knee-jerk reaction from jealous outsiders who haven’t made it to their party.

Bankers claim that the removal of “Bankers Immunity” might stop talented individuals coming to the party

Bankers claim that those who have spent years partying might find themselves carted off to jail because they cannot help themselves.

The British Public will have limited sympathy for the plight of senior bankers who are being faced with the options of shape up or get nicked. They are fully aware that most senior bankers have in the vaults a catalogue of misdemeanours under lock and key.

The institutional argument is that should the boxes be unlocked, the bankers arrested, the pillars on which our community is built would crumble bringing down the building.

The British Public prides itself on cleansing institutions of bad practice. We have a police force that is regularly purged of rotten apples (often for crimes of many years passing). Politicians have to live with the legacy of their decisions.

And stepping down a few rungs, do we call an amnesty on “benefit cheats” because their sins are in the past?

It is not just Bankers who have had immunity, it is Banking. The cleansing of institutions such as our police force and Westminster, has restored confidence not just in the governance of our society but in the ability of society to call our governors to account.

Bankers seem to be above the law, not just the law of the land (as imposed by the courts and devised by parliament) but the law of the populace, as administered by the media (including the social media).

That young and talented people would not joining Banking for threat of prosecution is an indictment on banking, not on the proposed change to Banking Immunity. Would you not take a job in a supermarket for fear that if you were caught stealing stock you would be prosecuted? Have our leaders stopped wanting to be MPs because their expenses are under scrutiny and misrepresentation threatens jail?

The whole case for Banking Immunity is based on the contribution of banks to the British Economy. But if the British Economy is supported by pillars such as rotten bankers, we are storing up troubles for the future.

When we discover structural problems in a motorway flyover, we close the flyover. The resulting traffic chaos is regrettable but unavoidable. It is better than losing lives if the bridge collapses.

This is the analogy I would draw with our banking system. It serves us well but it is flawed, to sort it, we may have to take a step back now before something awful happens.

The stakes are very high. The leverage still in our banks means that a banking collapse would still hurt our economy. We know how hard by looking back over the past 6 years of austerity.

As with pensions, so with bankers – we need a cultural shift in stakeholder value so that shareholders , management and employees recognise the value of the customer. Treating Customers Fairly must be more than the patina created by television adverts, it has to be at the heart of the bank’s culture.

If banks were proud of their behaviour, they would not fear the loss of Banker’s Immunity.

They would shout “bring it on”.

Banking regulation must be used to change banking culture because , left to their own devices, bankers cannot change themselves. The disruption to banks will be considerable (two Directors of HSBC have resigned at the prospect), but like the motorway flyover, remedial work is overdue and cannot be put off any longer.

About henry tapper

Founder of the Pension PlayPen, Director of First Actuarial, partner of Stella, father of Olly . I am the Pension Plowman
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