Parliamentary inquiry into banking gets underway

The parliamentary inquiry into banking got under way in earnest today, with a call for written evidence on ethics and standards in the industry.

The Parliamentary Commission on Banking Standards, chaired by Conservative MP Andrew Tyrie, was established by Prime Minister David Cameron earlier this month to look into issues arising from the Barclays Libor rate-fixing scandal.

It held its first formal meeting behind closed doors in Westminster on Tuesday, and agreed to request urgent evidence on the shortcomings in banking culture and possible legislative measures to address them.

Mr Tyrie warned that "almost everyone is agreed that standards in banking have lapsed", and that banks need to reform their culture and practices if they are to regain the trust of the British public.

The committee has been asked to report on proposals for legislative action no later than December 18, and they today asked for written evidence to be submitted if possible by August 24, though it is understood that later submissions will be accepted.

It is expected that the committee will wait until after August 24 to begin questioning witnesses at evidence sessions held in public, though no final decision has yet been taken on whether they will meet again during Westminster's summer break, which lasts until September 3.

Anyone with an interest in banking standards can respond to today's call for written evidence, and it is expected that submissions will be received from major banks and industry regulators.

The Commission is asking for comments on:

:: Whether professional standards are "absent or defective" in UK banking, compared to other countries and industries and to the City of past eras.

:: What consequences there have been for consumers and the economy and for public trust in the banks.

:: Whether shortcomings in standards were caused by factors including the culture of risk-taking, globalisation, global regulatory arbitrage, financial innovation, new technology, corporate structures, lack of competition or the impact of different tax treatment for debt and equity.

:: What weaknesses there are in the role of shareholders, creditor discipline and incentives, corporate governance, compliance, internal audits, remuneration incentives, recruitment and retention, arrangements for whistle-blowing, external audit and accounting standards, regulation and the corporate legal framework.

:: What should be done on a corporate, regulatory or legislative level to address any weaknesses.

:: Whether changes already proposed by the Government, regulators and the industry are sufficient to deal with the scale of the problems.

Mr Tyrie said: "Banks should exist to support their customers, both retail and wholesale. Some of these customers have been badly let down.

"Almost everyone is agreed that standards in banking have lapsed. Today, the Parliamentary Commission on Banking Standards has issued a call for written evidence.

"We need evidence to gauge both the scale of the problem and to identify likely remedies.

"By reforming the culture and practices that have so clearly failed their customers - and by being seen to be making such changes - banks can begin the process of regaining the trust of the British public.

"This is vital if they are to play a significant role in the UK's economic recovery and future growth.

"Moreover, the hundreds of thousands of people working honestly and for the benefit of their customers whose reputations have been unfairly impugned by the recent scandals may once again be able to take pride in the institutions they work for."

PA