The banking industry needs to be simpler, smaller and more transparent. So said the Archbishop of Canterbury, Justin Welby, in Westminster tonight.
He was speaking at a Bible Society-run debate on how the banking industry needs to be reformed.
He said that ‘confidence and trust had been lost’ in the banking industry since the financial crash of 2007-8.
‘There are no quick fixes,’ he told an audience of 150 bankers, clerics, MPs and journalists. ‘But there needs to be drastic action to get the confidence and trust back.
‘We will not do it by relying on legislation, but by competence, by service to society and by virtue.’
The Archbishop added that there needed to be accountability in the system. ‘It is necessary for banks to fail,’ he said.
He added that banks needed to be based in their local communities and work for the communities’ good. And he said that ‘one or two major banks’ needed to be broken up.
But beyond these major structural changes, the key to the future of banking lay in a change of values, he said.
‘Businesses should be companies of common interest that serve the common good,’ he said. ‘There need to be values within them that’s compassionate, empowering and all-knowing.’
His views were largely shared by the other panel members, the BBC’s business editor; Lord Myners, former finance services secretary in the Treasury under Labour; Jayne-Anne Gadhia, CEO of Virgin Money and Dr Paul Mills, senior economist on the International Monetary Fund.
The BBC’s Robert Peston said that banks must meet higher ethical standards than any other business.
‘I take the view that banks have an even greater obligation than most sorts of organisations to be good, as in their case they are underpinned by a guarantee by the taxpayers.’
He added that, ‘Just as there are bad people, there are bad companies. But we should not tolerate bad banks as we underpin them.’
And he said, that bankers needed to be held accountable for their actions. Formerly bankers knew that ‘if the bank went bust, they would go bust,’ he said. ‘But as we know these people are still living in their mansions.’
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