As a business owner, it’s simply staggering to even contemplate the possibility of running an enterprise like that.
I have a pretty good idea what a bank manager, or whatever they’re called nowadays, would tell a small business if that was the environment they have created for themselves.
Plumber’s maths will tell you 60 per cent of profits is significant, but it’s only when you turn it into pounds, shillings and pence does the enormity of the mismanagement of the banking system really expose itself.
The total amount of penalties for the last four years paid by Royal Bank of Scotland, Lloyds, HSBC, Barclays and Standard Chartered was £38.7bn. That’s just about the same amount Network Rail is investing in the upgrading of the UK’s railways.
This cash has been whipped away from the bankers’ bonus fund to pay for repayments relating to Payment Protection Insurance (PPI) and the interest rate hedging products. In 2014 the cost to the big five banks for PPI and interest rate hedging was £9.9bn.
Of course, it’s not just the largest banks that are victims of their own mismanagement. The total PPI bill, according to consumer group, Which?, stands at £24.4bn and nine UK banks have reimbursed business customers around £1.8bn after selling them complex deals on interest rates they didn’t understand or probably cost them more than the original loan.
If you add to this the UK and US banks that were collectively fined £2.6bn by British and American regulators for their attempts to manipulate foreign exchange rates, we find ourselves with a truly rotten “industry” whose self-serving attitude continues to put the economy at risk.
Do they honestly think the events of the 2007-2008 financial crisis have faded from our collective memories? Based on the evidence of their continuing practices, you don’t need me to give you the answer.
Read more from Charlie Mullins:
- Big firms play by different rules, so think small more often
- The “advance of the entrepreneurs” rally has come true
- The lack of apprenticeships in the UK still comes down to one big issue, money
While this report doesn’t tell us anything we didn’t already know about the city and its contempt for anything that exists outside its own bubble, what is clear is that these guys need to be kept on a short leash otherwise they will run wild.
It’s vital they cannot continue to exploit their customers and if they have to return such a huge chunk of their profits until they change their ways then so be it.
If they were allowed to run amok, even more than they have been, with no consequence, the system is in danger of total collapse if the sector never pays its dues.
And perhaps, instead of confirming the ridiculous practices of the banks, this report could be seen as a veiled attempt by the banking community to beg for its big bonuses back.
Whatever the motivation, it proves that the banks need a conscience forced upon them through the system of fines and audit programmes that uncover mismanagement and shady practices.
Otherwise history will repeat itself with perhaps even deadlier economic results.
Share this story