A new standards body for bankers is to be set up in Britain, with a focus on improving culture, capability and customer outcomes.
The Banking Standards Review Council (BSRC) has been devised by Sir Richard Lambert, the former head of the Confederation of British industry.
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"Rebuilding confidence and trust in the banks is especially vital in the UK, because of the size of the banking system and the importance to the economy of London’s role as an international capital market," said Lambert.
Lambert is currently standing in as interim chairman, but a permanent chairman will be appointed by a panel chaired by Bank of England Governor Mark Carney.
"I encourage all banks that operate in the UK, both domestic and foreign to support this endeavour. We need a financial system that is safe, fair and acts with integrity," Carney said.
The BSRC will require banks to report annually on their progress in improving their internal culture and practices.
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By GlobalDataThe UK’s five biggest banks – HSBC, Lloyds, Barclays, Santander and Royal Bank of Scotland, along with lender Nationwide – promised to set up the body after the industry was plagued with scandals over the course of 2013.
Allegations levelled against the banks included rigging of benchmark interest rates, breaches of anti-money laundering rules and the mis-selling of loan insurance and complex interest rate hedging products.
Critics of the new standards body have said it lacks the teeth of a regulator, but Lambert said the power of the BSRC will lie in its ability to expose bad practices and a lack of integrity in banking institutions.
"What you’ve got to start off by understanding is that there is strong, new, robust regulation put in place by Parliament last winter, there is strong new statutory stuff.
"The regulator’s job is to deal with bad behaviour. The idea of this outfit is to show what good practice looks like and nudge, chivvy, bully banks to take it forward.
"Participating banks will agree each year to a programme of continuous improvement and they will be measured under headings like culture, competence and customer outcomes – particularly customer outcomes – they’re really important."
"The teeth and the sanctions lie with the regulator, this body will only have the oxygen of publicity."
According to academic research published on the 14 May, the UK’s four biggest banks were forced to reserve £21.5bn ($36bn) to pay fines and customer redress during 2013.
The research into the conduct costs of Barclays, HSBC, Lloyds Banking Group and Royal Bank of Scotland was carried out by the London School of Economics (LSE).
Last year’s costs came on top of almost £25bn of conduct costs the four banks have run up since the financial crisis.
About £19bn of those costs were run up during 2012, a figure that the LSE professor leading the research attributed to the costs of the payment protection insurance scandal coming "home to roost".
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