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Another hornets’ nest

The more we hear about the Libor scandal the more it looks like a hornets’ nest: known and unknown banks knee-high in corrupt practices, regulators having been told but preferring to turn a blind eye to the most malodorous, arrogant and unethical behaviour imaginable in any business culture.

By Hal Austin | Published Jul 18, 2012 | Regulation | comments

What makes it worse, is that most of this started in the boom years preceding the banking crisis, went on through the crisis, continued even when the banks’ debt was transferred to taxpayers, and even so there is a growing belief that this was still being practised until recently.

That we have chosen, so far, not to call in criminal investigators, with their proven skills for forensically examining bad practice, is nothing to be proud of.

That some of the biggest individual names in financial regulations have been mentioned as having known, or were notified, of the corrupt practice, makes it even more worrying.

Like the unrepentant burglar, some Barclays’ officials are allegedly putting it about that if people think they were behaving badly, we should all wait until the known and unknown banks involvement are revealed.

So, British banking ethics have come down to a comparable analysis: who is bad, really bad and unforgivable.

By any measure, this is a deplorable state. At the very best it undermines consumer confidence in our banking system, over and above the concerns people already had, and at worst, it makes it seem as if we just cannot trust anyone in authority – politics, state enterprise or private industry.

From rigging the benchmark that determines the lending rates for mortgages, credit cards and bank loans, to that of petrol prices at the pump.

What next? Are they going to kidnap babies for money?

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Doing the job properly

Now that major banks are running in to serious trouble with their technology following the decision to outsource, and with clients of other firms losing money to organised gangsters in these countries, now is as good a time as any for the City regulator to re-consider if outsourcing is in the best interest of savers and investors.

We have always said here at FA that, over and above the security risks, jobs should be kept at home.

It is more reassuring to hear a voice from the far corners of the Kingdom than someone speaking to us from South America, Asia or Africa. Further, we must ask what is the real cost of outsourcing? Maybe some firms only see the bottom line and totally ignore customer protection, including passing all one’s personal data on to people from the back of beyond.

While we are shaking up the banks and other financial institutions, let us do a proper job, root and branch.

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Our Columnists

Ashley Wassall

Ashley is editor of FTAdviser and writes on all areas of retail finance. Previously supplements editor at Money Management and editor of a European private equity publication.

John Kenchington

John is editor of Investment Adviser and has written about investments for several years. He has worked at titles including City AM and was recently named in the MHP 30 To Watch list of up-and-coming media names.

Jon Cudby

Jon is editor of Money Management and has 12 years' experience covering retail personal finance. In 2005, Jon was launch editor of FTAdviser and most recently he was head of online content for Incisive Media's financial services titles.

Tony Hazell

Tony is a freelance financial journalist, having been editor of Money Mail at the Daily Mail for a number of years. He has been writing a column in Financial Adviser since 2005.

John Lappin

John is a weekly contributor to Investment Adviser with 15 years’ experience in financial journalism and 10 years writing on the IFA sector. He was formerly editor of an IFA trade magazine.

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