Last week we found out which measures the government will adopt to improve the culture and standards in banking. Headlines of course focused on a new criminal offence for 'reckless mismanagement' of banks. While this is a decision for parliament my concern is a new law won't help restore the key missing ingredient - trust.
People are angry with banks - they have every right to be after all the scandals that have engulfed the sector. Our small and medium-sized members often feel that the bank will do what is best for itself, rather than the customer. But a thriving economy is dependent on a healthy banking system and banking won't be healthy without trust.
To get it back, we must make clear that the banking system can work for everyone by focusing on two areas: facilitating competition and empowering the consumer.
Competition depends on ensuring banks can enter, expand, and even exit the market. Having to fight for each customer means there is always pressure to do more - to provide a better service or to offer greater value. And there are already promising signs that the sector is increasingly competitive. We have new market players, such as Marks & Spencer and Metro Bank. In addition, barriers which up until now might have prevented new banks springing up have been removed, like the reduction in capital requirements placed on new entrants. But the banks I talk to, both the fresh faced and the more established players, realise there is more to do. We can start by ensuring that banks can properly fail, without needing bailouts or hurting the customer. We need to also make sure that the banking payment system, the piping which moves all of our money around, is easily accessible to everyone, so that roadblocks to wannabe challengers are minimised.
That's got to go hand-in-hand with action to put bank customers in the driving seat. Consumer empowerment is the engine of competition, as people choose between what works for them, and what doesn't. So customers need to be able to access, assess and act on information. Banks have raised their game at making more information available, but it needs to be more user friendly. An official kitemark in recognition of simple retail products that are easy to assess will help to restore confidence in banking's core functions. Levels of acting on this information also need a boost. That's why seven-day switching, where the bank does the leg work on changing your account in a week, is so good for banking and the economy.
Banks have rightly been under the microscope. That doesn't mean everything is perfect - not yet - but we need a clean break so that sector can settle down and get on with its job of supporting growth. We've had the reviews and regulation, now we need to focus on competition and ensure that banks are geared up to putting customers at the heart of everything they do.