Vince Cable says UK banks have failed their customers
Vince Cable, the coalition government’s Secretary of State for Business, has criticised the UK banking system saying that it is structurally flawed and has failed its customers.
Mr Cable was speaking at the Which? Banking Reform debate in London today and said that the risks taken in the past were ‘unacceptable.’ He said that he is in favour of separating the banks retail operations from its investment business.
Mr Cable said: “My own instincts lie with the full separation of retail and proprietary banking. If banks know they are too big to fail, they take excessive risks and this is not sustainable. Taxpayers should no longer have to bail out banks if they hit financial difficulties.”
Which? Chief executive Peter Vicary-Smith also spoke at the event and spoke about bringing greater competition into the UK banking sector and pushed for the Independent Commission on Banking, chaired by Sir John Vickers, to be brave in its recommendations.
He said: “The Independent Commission on Banking must be brave in its recommendations to the Government, and the Government must be brave in implementing them.”
Hermes Asset Management Chairman David Pitt-Watson warned that the lessons of the previous bank crisis seemed not to have been learned, that not enough had been done to prevent another financial crisis and that the culture of banks was still an issue.
Mr Cable added: “There is still public anger over bonuses and banks and regulators need to create a structure where bonuses aren't underpinned by taxpayer.”
Sarah Brooks, Director of Financial Services at Consumer Focus said: “The Independent Commission on Banking has a unique chance to look at how a healthy, competitive market place in banking can be encouraged. Selling off bank branches is a start but it also needs to consider a greater role for co-ops, a Post Office bank, mutuals, building societies, credit unions and others providing a wide choice of products and services.”
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