Britain’s bankers haven’t ‘got away’ with anything

We may not have seen many high profile prosecutions, but the banking industry hasn’t got away with much at all, says Merryn Somerset Webb.

In the MoneyWeek editor's letter last week (which subscribers can read here) I looked at the idea that the UK's bankers have somehow "got away with it" "it" being their role in the financial crisis.

I said that, while it is true that we haven't seen much in the way of high profile prosecutions, the industry as a whole hasn't actually got away with much at all. Pay has fallen, regulation has increased dramatically, fines have become genuinely punitive, and the personal risk financiers are obliged to take on in relation to their work has risen too.

Look at the FT today, and you will see pretty substantial evidence of this. If you start at the back of the paper and look at page 17, you will learn that that the Serious Fraud Office has secured its first guilty plea in the Libor case: "a senior banker from a leading British lender" has admitted to "criminal charges stemming from the global inquiry into alleged rigging of Libor". He will be sentenced in due course.

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Page five picks up the story with a piece on recruitment where a "headhunter who places senior people in the financial industry" tells us that "fundamentally a lot of ways in which banks made money before have been regulated out of being".

Move forwards to page one of the paper, and you will see genuine "City disquiet" (not always a bad thing), because we are about to see tough new rules that could "jail reckless bankers".

The new rules include giving "senior managers" a clear definition of responsibility and making them accountable for any misconduct in that area, says the FT, as well as introducing a new criminal offence of reckless misconduct that causes a financial institution to fail. "There is no equivalent offence elsewhere in the world."

Regulators are also "planning the world's toughest regime for clawing back bonuses up to seven years after they are awarded".

It's all about responsibility. As Andrew Tyrie, the MP who chairs the Treasury committee, notes, a "buck that does not stop with an individual often stops nowhere". But this idea isn't working for everyone.

Two individuals are prepared to have the buck stop with them already, two board members at HSBC are resigning "as part of a pushback" against the rules, and there are "warnings" that more executives are likely to follow.

But whether you approve of it all or not, what you can't do is argue that nothing has changed for the financial industry in the last seven years. It just isn't so.

Merryn Somerset Webb

Merryn Somerset Webb started her career in Tokyo at public broadcaster NHK before becoming a Japanese equity broker at what was then Warburgs. She went on to work at SBC and UBS without moving from her desk in Kamiyacho (it was the age of mergers).

After five years in Japan she returned to work in the UK at Paribas. This soon became BNP Paribas. Again, no desk move was required. On leaving the City, Merryn helped The Week magazine with its City pages before becoming the launch editor of MoneyWeek in 2000 and taking on columns first in the Sunday Times and then in 2009 in the Financial Times

Twenty years on, MoneyWeek is the best-selling financial magazine in the UK. Merryn was its Editor in Chief until 2022. She is now a senior columnist at Bloomberg and host of the Merryn Talks Money podcast -  but still writes for Moneyweek monthly. 

Merryn is also is a non executive director of two investment trusts – BlackRock Throgmorton, and the Murray Income Investment Trust.