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.
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.