Merryn's Blog

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.

Advertisement - Article continues below

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".

Advertisement - Article continues below

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.




How long can the good times roll?

Despite all the doom and gloom that has dominated our headlines for most of 2019, Britain and most of the rest of the developing world is currently en…
19 Dec 2019

Beyond the Brexit talk, the British economy isn’t doing too badly

The political Brexit pantomime aside, Britain is in pretty good shape. With near-record employment, strong wage growth and modest inflation, there is …
17 Oct 2019
UK Economy

UK set to see more extreme monetary policy

The Bank of England looks likely to cut interest rates below zero at the end of this year.
4 Jun 2020
UK Economy

Good news at last – household debt is falling fast

Thre's not much good news around at the moment., But the fact that UK households are paying off debt at a record rate must surely count, says Merryn S…
4 Jun 2020

Most Popular


Disease, rioting and mass unemployment – so why are markets soaring?

Despite some pretty strong headwinds in the last year, America’s S&P 500 stock index is close to all-time highs. John Stepek explains why markets seem…
4 Jun 2020

These seven charts show exactly why you must own gold today

Covid-19 is accelerating many trends that were already in existence. The rising gold price is one such trend. These seven charts, says Dominic Frisby,…
3 Jun 2020
EU Economy

Why a stronger euro is good news for investors

The fragile state of the eurozone has for a long time brought the threat of deflation. But the ECB’s latest moves have dampened those fears. John Step…
5 Jun 2020