James Moore: Why George Osborne must beware of the banking backlash

Outlook The blue touch paper has been lit and it might pay for George Osborne to consider a flak jacket when he delivers his Mansion House speech.

Today's report by Andrew Tyrie's Parliamentary Commission on Banking Standards is a lengthy affair. Yet unlike so many such tomes emanating from various organs of the British state, the language is quite economical. And in some places it cuts like a rapier.

Those cuts will not go unanswered. There is likely to be an enormous blowback from the leaders of the financial community today, because the report takes aim squarely at them. Its chief targets can be identified as the gilded corps of banking industry executives who ducked any and all responsibility for what occurred on their watch... leaving the British taxpayer with a bill estimated at £1trn for propping up the industry during the financial crisis, with confidence in an industry which survives only as a result of it at dangerously low levels. And that was even before the succession of scandals that were uncovered lurking within the wreckage.

If there is any group which exemplifies the "one-way bet" enjoyed by senior business leaders it is they who enjoyed fabulous rewards during the good times, and retired with fabulous pensions when the house of cards, whose foundations they built, fell over.

To ensure no repeat the Commission's report breaks new ground in a number of areas, areas which will prove hugely controversial. For a start it seeks to establish clear lines of accountability so executives can no longer rely on the "didn't know" or "couldn't have predicted" defences, and spreading responsibility around committees. This made it impossible for regulators to realistically launch proceedings against any of them.

It dares to suggest shifting the burden of proof for those faced with regulatory sanction onto the accused, at least in the most serious of cases. Although the libel laws, which demand that the defendant proves they did not defame a plaintiff rather than the other way around, do define something like this principle in English law, the legal profession will be up in arms publicly, and plotting methods of challenge privately.

Then there is the possibility of stripping executives of their "unvested" pensions if banks are bailed out, a response to the outrage over the vast retirement pots accumulated by Fred Goodwin at Royal Bank of Scotland and James Crosby following his term at the head of HBoS. Pensions have tended to be seen as sacrosanct, untouchable even in instances of personal bankruptcy. But not any more.

Senior executives are not accustomed to this type of treatment. In theory they are already held to account by shareholders. In practice the institutions that control companies only react when confronted with such flagrant malpractice that they have little choice. This report is as much a consequence of their failings as it is of the banking industry's.

There are recommendations that will find some favour in the City. The report has no truck, for example, with the EU's blunt instrument of capping bonuses. However, executives will not love the greater powers of deferral and clawback. If they want the money, they'll have to behave.

In general, the problem for the industry, as it girds its loins for the battle to come, is that the public will stand squarely behind Mr Tyrie and his Commission.

Business groups appear to have perceived this. Their public responses have shown a degree of caution despite some of the report's more incendiary recommendations.

In private it will be a different matter.

That said, riding roughshod over public opinion would be a dangerous move for Mr Osborne. The Commission has produced a commendable, courageous, and exhaustive report. Woe betide the politician that seeks, to coin a phrase, to get around or "game" its main thrust.

Suggested Topics
Alexis Sanchez has completed a £35m move to Arsenal, the club have confirmed
sportGunners complete £35m signing of Barcelona forward
Poor teachers should be fearful of not getting pay rises or losing their job if they fail to perform, Steve Fairclough, headteacher of Abbotsholme School, suggested
voicesChris Sloggett explains why it has become an impossible career path
world cup 2014
Ray Whelan was arrested earlier this week
Arts and Entertainment
In a minor key: Keira Knightley in the lightweight 'Begin Again'
Arts and Entertainment
Celebrated children’s author Allan Ahlberg, best known for Each Peach Pear Plum
peopleIndian actress known as the 'Grand Old Lady of Bollywood' was 102
Wayne’s estate faces a claim for alleged copyright breaches
newsJohn Wayne's heirs duke it out with university over use of the late film star's nickname
Life and Style
It beggars belief: the homeless and hungry are weary, tortured, ghosts of people – with bodies contorted by imperceptible pain
lifeRough sleepers exist in every city. Hear the stories of those whose luck has run out
Mick Jagger performing at Glastonbury
Life and Style
fashionJ Crew introduces triple zero size to meet the Asia market demand
ebookA unique anthology of reporting and analysis of a crucial period of history
Santi Cazorla, Mikel Arteta and Mathieu Flamini of Arsenal launch the new Puma Arsenal kits at the Puma Store on Carnaby Street
sportMassive deal worth £150m over the next five years
Arts and Entertainment
Welsh opera singer Katherine Jenkins
musicHolyrood MPs 'staggered' at lack of Scottish artists performing
Life and Style
beautyBelgian fan lands L'Oreal campaign after being spotted at World Cup
Arts and Entertainment
Currently there is nothing to prevent all-male or all-female couples from competing against mixed sex partners at any of the country’s ballroom dancing events
Potential ban on same-sex partners in ballroom dancing competitions amounts to 'illegal discrimination'
Have you tried new the Independent Digital Edition apps?
Independent Dating

By clicking 'Search' you
are agreeing to our
Terms of Use.

iJobs Job Widget
iJobs Money & Business

Business Analyst Consultant (Financial Services)

£60000 - £75000 per annum: Harrington Starr: Business Analyst Consultant (Fina...

Systems Administrator - Linux / Unix / Windows / TCP/IP / SAN

£60000 per annum: Harrington Starr: A leading provider in investment managemen...

AVS, JVS Openlink Endur Developer

£600 - £700 per day: Harrington Starr: AVS, JVS Openlink Endur Developer JVS, ...

Technical Support Analyst (C++, Windows, Linux, Perl, Graduate)

£30000 per annum: Harrington Starr: A global leader in trading platforms and e...

Day In a Page

A History of the First World War in 100 Moments: Peace without magnanimity - the summit in a railway siding that ended the fighting

A History of the First World War in 100 Moments

Peace without magnanimity - the summit in a railway siding that ended the fighting
Scottish independence: How the Commonwealth Games could swing the vote

Scottish independence: How the Commonwealth Games could swing the vote

In the final part of our series, Chris Green arrives in Glasgow - a host city struggling to keep the politics out of its celebration of sport
Out in the cold: A writer spends a night on the streets and hears the stories of the homeless

A writer spends a night on the streets

Rough sleepers - the homeless, the destitute and the drunk - exist in every city. Will Nicoll meets those whose luck has run out
Striking new stations, high-speed links and (whisper it) better services - the UK's railways are entering a new golden age

UK's railways are entering a new golden age

New stations are opening across the country and our railways appear to be entering an era not seen in Britain since the early 1950s
Conchita Wurst becomes a 'bride' on the Paris catwalk - and proves there is life after Eurovision

Conchita becomes a 'bride' on Paris catwalk

Alexander Fury salutes the Eurovision Song Contest winner's latest triumph
Pétanque World Championship in Marseilles hit by

Pétanque 'world cup' hit by death threats

This year's most acrimonious sporting event took place in France, not Brazil. How did pétanque get so passionate?
Whelks are healthy, versatile and sustainable - so why did we stop eating them in the UK?

Why did we stop eating whelks?

Whelks were the Victorian equivalent of the donor kebab and our stocks are abundant. So why do we now export them all to the Far East?
10 best women's sunglasses

In the shade: 10 best women's sunglasses

From luxury bespoke eyewear to fun festival sunnies, we round up the shades to be seen in this summer
Germany vs Argentina World Cup 2014: Lionel Messi? Javier Mascherano is key for Argentina...

World Cup final: Messi? Mascherano is key for Argentina...

No 10 is always centre of attention but Barça team-mate is just as crucial to finalists’ hopes
Siobhan-Marie O’Connor: Swimmer knows she needs Glasgow joy on road to Rio

Siobhan-Marie O’Connor: Swimmer needs Glasgow joy on road to Rio

18-year-old says this month’s Commonwealth Games are a key staging post in her career before time slips away
The true Gaza back-story that the Israelis aren’t telling this week

The true Gaza back-story that the Israelis aren’t telling this week

A future Palestine state will have no borders and be an enclave within Israel, surrounded on all sides by Israeli-held territory, says Robert Fisk
A History of the First World War in 100 Moments: The German people demand an end to the fighting

A History of the First World War in 100 Moments

The German people demand an end to the fighting
New play by Oscar Wilde's grandson reveals what the Irish wit said at his trials

New play reveals what Oscar Wilde said at trials

For a century, what Wilde actually said at his trials was a mystery. But the recent discovery of shorthand notes changed that. Now his grandson Merlin Holland has turned them into a play
Can scientists save the world's sea life from

Can scientists save our sea life?

By the end of the century, the only living things left in our oceans could be plankton and jellyfish. Alex Renton meets the scientists who are trying to turn the tide
Richard III, Trafalgar Studios, review: Martin Freeman gives highly intelligent performance

Richard III review

Martin Freeman’s psychotic monarch is big on mockery but wanting in malice