And good regulation should forensically trace the origin of this ethical decay: who issued the instruction? What was the justification for it? What were the expected outcomes? Until senior managers in these organisations, just like small mortgage brokers, are fined and banned from the industry, we will not see any changes in this behaviour.
This also goes for the corporations. Fine the corporation, and that cost will be passed on to taxpayers and customers. But remove 100 per cent of executives’ bonuses, then fine them for improper conduct and the various conditions under Principle One, and their actions will radically change.
It is naïve and juvenile to claim, as some people do, that although banks need to improve their game, tougher regulatory rules are unnecessary.
The fact is that retail banks are more than just profit-making businesses, they are in effect similar to utilities in that they perform a social service, and as such the state, through the agency of the central bank, must act as lender of last resort. For that guarantee, taxpayers have a right to demand a certain standard of service from retail banks.
Over the last few years we have seen leading banks setting aside tens of billions of pounds as provision against likely regulatory fines for mis-selling payment protection insurance, rigging foreign currency, alleged money laundering – both in this jurisdiction and the US – without a single one appearing in the courts of law (junior UBS dealers aside) to answer for their misdeeds.
This sends a message: to lowly customers who, realising they are up against the big battalions of the corporate world, retreat into their little boxes; to regulators, who often find that the legal and compliance heavyweights of the banks are more knowledgeable than their own enforcement officers; and politicians, who fear undermining the City.
The big high street banks know they are too big to fail and they behave like playground bullies: closing branches while ignoring the needs of customers, from about 17,000 in the early 1990s to about 7,000 today.
One only has to look at the new business models, often based on flawed research, such as the rush to digital and telephone banking, on the spurious grounds that cash is going out of fashion.
Finally, some people may question why the City regulator is keen to impose its Principle One conditions on errant individuals, yet is less keen to do so on the big corporates.
Big banks too can be reckless, lacking in integrity, dishonest and unfit to continue working in financial services – unless, of course, different rules apply if the name of the bank or major financial institutions is known globally.
