Six ways the banks have taken back control

28th February 2016 / United Kingdom

Results week for the UK’s biggest banks is well underway.

HSBC have already announced profits of £13.2bn for 2015 – bouncing-back from the slump they experienced in 2014. Lloyd’s Banking Group is also expected to be celebrating tomorrow, with big bonuses for the usual handful of executives already confirmed.

On Monday we revealed the £5.8bn implicit subsidy already enjoyed by big banks, courtesy of the taxpayer. It’s just one indication that post-crisis reforms did not fix the structural problems with the UK banking system.

Not only that, but a string of recent concessions to the City has started to roll back what limited progress was made since 2009 to reform our broken banks.

How have they managed to fast-track a return to business as usual? Big banks have chalked up six recent victories:

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  1. Changes to the bank levy which benefit large international banks such as HSBC at the expense of smaller challenger banks;
  2. The sacking of Martin Wheatley as Chief Executive of the Financial Conduct Authority (FCA), a move which has been followed by a number of inquiries and investigations being dropped;
  3. A watered-down set of proposals for implementing the ring fence between retail and investment banking, particularly in relation to economic links with the rest of the group;
  4. A disappointingly weak report from the Competition and Markets Authority, which rules out action to break up big banks and instead focuses on consumer switching behaviour;
  5. Confirmation by the Bank of England that banks will not be asked to hold significantly more capital;
  6. Imposing a time-limit on claims relating to mis-selling of payment protection insurance (PPI).

Big banks take much more than they give to our economy. The Chancellor’s recent talk of a ‘new settlement’ between the government and the City is dangerously complacent – he and other ministers must be more prepared to face down their demands.

With the global economy facing a slowdown and economists warning that another crash could be just around the corner, it is more urgent than ever that we address the shortcomings of banking reform that promised to fix our broken financial system.

By New Economics Foundation


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