We must ensure ethics and integrity are brought back to the banking industry
For too long, bankers have been allowed to play by their own rules and the customer on the high street has paid the price. They gambled with our money while the Labour government advocated, by its own admission, “light-touch, risk-based regulation”. This approach left us in a highly precarious financial position and our economy on the brink of collapse. The result has been failing banks shored up by the taxpayer and companies struggling to survive in a harsh financial climate.
I believe the best way forward is to break up the banks separating retail and investment banking. This guarantees that the customer on the high street and the small businessman will never again be left vulnerable by bankers who are prepared to make high risk investments with our money. We need to make it easier for banks to set up and they must be run on safe, traditional lines.
We will carry out an inquiry and ensure that all our findings are implemented in the Banking Reform Bill scheduled for early next year. Individual bankers who acted outside the law must be held to account. They believed for too long they could operate above and beyond the normal rules of business. Both Nick Clegg and Vince Cable have added their support to calls for a criminal investigation. The Serious Fraud Office is looking at whether there are any criminal prosecutions that can be brought, and they are using the full force of the law in dealing with this. It is right that the people responsible should be held to account if we are to be able to draw a line under this whole affair.
The result of the 2008 banking crash and the scandals that followed have left all of us facing the repercussions. Mortgages have been harder to secure and small businesses have found the money they need to invest and grow is largely not on offer or available at interest rates which are unaffordable. Without growth, companies cannot expand their workforces and the result is a seriously depleted jobs market.
We have been fortunate in Cambridge to weather the storm better than many places in the UK, however, and I am grateful for that. But I am also very aware that our businesses are finding it a tough financial climate in which to trade and that is why I organised an advice surgery for small companies on Friday (July 13) to give them the chance to get the financial advice and help they needed from the banking sector. Only by understanding fully how a business operates and its individual needs and requirements can bankers have confidence in a company and offer the tailor-made help that is required.
In the middle of this whole banking scandal and the greed for bigger returns and fatter bonuses, I fear that many in the industry lost sight of how our respect was earned in the first place by helping the grass roots business that built this country and will help to pull it out of this recession.