A proposed U.K. group to oversee standards in banking will be inadequate because it doesn’t have sufficient powers to penalize executives and regulators for wrongdoing or failings, a lawmaker said.
The Banking Standards Review is seeking to create a group to monitor behavior and competence, with lenders taking voluntary membership. The group, to be funded by the banking industry, won’t have legal powers, according to a document released today by the BSR.
“This is too little, too late and it’s a bit like trying to catch a bear with a sheep,” John Mann, a Labour Party member of Parliament who sits on the Treasury Committee, said in an interview today. “It demonstrates an unwillingness to get on top of wrongdoing in British banking.”
The Parliamentary Commission on Banking Standards, assigned by the government to investigate industry failures, recommended in June that the banks create an independent body to maintain standards. Banks have been hit by scandals including the rigging of benchmark interest rates, the improper selling of loan insurance as well as money laundering.
Britain’s biggest banks, including Barclays Plc, HSBC Holdings Plc, Lloyds Banking Group Plc and Royal Bank of Scotland Group Plc named Richard Lambert, former head of the Confederation of British Industry, to run the BSR in September.
“Participating banks and building societies will commit to a program of better banking standards, covering both conduct and competence, and will agree to report publicly on their progress on an annual basis,” Lambert said in the document.
Lambert said he will publish a business plan for the group after the consultation period, which ends March 7.
“It should be something that gives regulators a kick as well as the bankers,” said Mann. “This is the single biggest industrial scandal in British history by a considerable degree.”
The new group should also provide a way for bankers to be able to flag wrongdoing and investigate any claims, said Dominic Hook, national officer for the Unite labor union.
“This body has to have some teeth, it needs to be fully independent and it has to be able to enforce standards of behavior,” Hook said. “It needs to not only do those kinds of things, but be seen to do them because the reputation of banking is so awful.”