Hold your nerve

Financial Adviser

Banks want unconditional appreciation, they want us to love them or leave them without a right to comment on their corporate behaviour.

The answer to that must surely be no, that if we choose to appreciate them for their services, we also want to comment on their lacking in customer care. Surely that is not too much to ask?

One of the few positive outcomes from the 2007/8 banking crisis was the 2011 Vickers’ report call for the ring-fencing of retail banks.

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Due to come into force in 2019, recently there has been a concerted and mounting chorus of opposition to this modest proposal from powerful forces.

Every argument is being used: from the notion that London will lose its place as the leading global financial city if government were to go ahead with the proposal, to the old red herring that the top talent will up stakes and move to Hong Kong, or Frankfurt or New York – or leave the sector entirely.

Most of it is bluffing; even if it were not, regulators and parliament must not take their eyes off the principle that the most important people in this deal are the customers.

It is the customer who stands to lose his life savings when some bright young man or woman takes chances on off balance sheet SPVs, or on the performance of the currency markets.

All these activities are legitimate and those with the skills and knowledge have a right to engage in them.

But, equally, there is no moral or professional right for them to pull down the whole shebang with them when they get it wrong. Most people with a few pounds to save in case of a rainy day take a gamble between putting the money under their beds and putting them safely in a bank or building society.

In turn, they expect that money to be managed prudently and as a result they will get returns above the rate of inflation. The Treasury and the City regulator must put this discussion to bed by reaffirming that there is no going back on ring-fencing.