The financial services industry requires “profound reform” if future banking crises are to be avoided, a new commission has claimed.
According to a report by the Future of Banking Commission, a number of changes are needed within the banking industry in order to improve stability and offer more protection to consumers in the event of a market crash.
Recommendations from the cross-party group included ensuring that banking boards are responsible for an institution’s stability and the implementation of ‘living wills’ to detail how a bank would be managed in the event of a failure.
Rt Hon David Davis MP, chair of the Future of Banking Commission, said that the banking industry is “vital” to the health of the UK’s economy.
“Nevertheless, fatal flaws in the structure, regulation and behaviour of the banks almost crippled the world economy in the last few years. The UK cannot afford to face such a crisis again.”
He added: “Nor can it afford to allow the fundamental weaknesses in its banking system to go on, precisely because the economy depends so much on an effective and efficient financial system.”
Regulators, business groups and consumers were questioned by the commission as part of the research.
Lord Myners, former City minister and Mervyn King, governor of the Bank of England, were among the senior figures from the banking industry quizzed in the survey.
By Jim Ottewill