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Ed Miliband: Bad bankers must be struck off

Category: Politics

Published: 9th Jul 2012 11:41:03

Labour leader Ed Miliband has called for a code of conduct to be set up for bankers, following recent scandals within the industry.

He argued that those guilty of wrongdoing should be "struck off", as happens to doctors and lawyers.

Mr Miliband told an audience of financiers it was time to move from "casino" to "stewardship" banking.

He also outlined plans to set up a specialist financial crime unit within the Serious Fraud Office.

The government argues it is already reforming the banking system and that most of the current problems were not dealt with by Labour governments.

Mr Miliband's speech, at the Co-operative Bank in London, follows a record fine of £290m for Barclays after some of its staff were found to have rigged inter-bank lending rates during the middle and end of the last decade, when his party was in power.

The Serious Fraud Office has also confirmed it is investigating.

Mr Miliband called for "at least" two "challenger" banks to be set up to break up the hold of the "big five" of Barclays, Lloyds, HSBC, RBS and Santander on the UK market.

He proposed that the major banks should be forced to sell up to 1,000 branches to enable this, saying: "Let's turn five into at least seven so there is proper choice for the consumer."

Mr Miliband said the country had endured a "shift from stewardship banking to casino banking - moving from a culture when banks cared about the local business and had an interest in its success".

He added it was time "the term banker goes back to being a compliment rather than a term of abuse".

Mr Miliband went on: "Stewardship banking relies on the idea that banking is a trusted profession, not a fly-by-night activity.

"If we're serious about banking regaining the status of teaching, medicine, law, we have to act. Those professions have clear rules. Codes of conduct which lay down what is expected.

"We need the same for banking. Anyone who breaks the rules should be struck off."

Mr Miliband said the loss of 200 building societies since the 1980s had been damaging, with banks often "more focused on their investments in the global financial markets than they are on their local customers".

The Labour leader said some of the "most deprived areas of the country" were being "almost entirely excluded from banking services".

He praised a law passed in the United States during the 1970s, forcing banks to publish details of the areas in which they were not lending. Some banks in the UK were already holding this information, he added, arguing: "We should collect and publish it."

A lack of lending was disabling firms, Mr Miliband said. He added: "It's time British business stopped having to compete with one hand tied behind its back."

But the government said it was already facilitating the creation of two challenger banks, in the shape of Co-operative Bank and Virgin Money, with a source telling the BBC: "Labour is simply demanding what we've already done."

They added: "Labour left us a system where there were no criminal sanctions through the regulatory system. We are changing that."

And Business Secretary Vince Cable told the BBC that the coalition was already working to reform the banking system, with plans in place to create challenger banks.

The Barclays scandal has led to a political row between Labour and the coalition about how a subsequent inquiry should be handled.

Labour voted against the creation of a parliamentary committee to investigate the scandal after its bid to launch a judge-led inquiry was rejected. But the Commons backed the plan by a majority of 104.

Plaid Cymru MP Jonathan Edwards, the party's Treasury spokesman, said of Mr Miliband's speech: "These weak and inadequate proposals will do nothing to address the fundamental flaws in the UK banking system.

"What small businesses urgently require is an alternative banking model based on the community banking model of countries such as the US and Germany."

Meanwhile, Paul Tucker, the deputy governor of the Bank of England, is to appear before the Treasury Committee later to be questioned about a key conversation he had with the former boss of Barclays, Bob Diamond, in 2008.

Mr Diamond has said he spoke to Mr Tucker about the Libor rate - which decides the interest charged on inter-bank lending - but denied being given instructions to lower his bank's reported rate.

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BBC News, 2012. Ed Miliband: Bad bankers must be struck off [Online] (Updated 9th Jul 2012)
Available at: http://www.ukwirednews.com/news/1439427/Ed-Miliband-Bad-bankers-must-be-struck-off [Accessed 2nd Sep 2014]

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