Scandals In the Banking Sector are Damaging Society In the UK
When it comes to the Lloyd’s Banking Group, they seem to have a lot of bad luck as far as scandals are concerned. Their HBOS unit continues to be surrounded by news of fraud which had been conducted by the bankers and consultant’s friends working at their Reading branch, creating turmoil for numerous small businesses which were operating in the Thames Valley region.
Only a week ago a report surfaced which brought to light some new information. According to the new revelations, it was brought to everyone’s attention that, when Lloyds Banking Group was in the process of acquiring HBOS, the bank did not disclose the fact that such a fraud had taken place.
About The Report
The new report was published by a group called the All-Party Parliamentary Group on Fair Business Banking, although it had already made rounds on the internet, and stated that at the time of the global financial crises, when the bank was supposed to be assisting customers who were already under a lot of financial stress, it instead chose to deliberately conceal facts from them.
Had this not been done, would the bank have had the privilege of generating a rights issue in the year 2008 or be successfully acquired and saved by the Lloyds Banking Group? After the revelation of this document, all of this has been put into question.
Investigation Launched By Lloyds Banking Group
Lloyds Banking Group launched an internal investigation into the matter sometime in April 2018, appointing Dame Linda Dobbs as the investigator of the internal report.
The Treasury Committee has become involved into the matter as well, demanding the report created by Dame Linda into the matter, although the report, according to Lloyds, is bound to be published considering the banking group is already cooperating with the Financial Conduct Authority, which is also conducting its own investigation on the matter.
According to a statement released by the bank, it remains fully committed to understanding the events which transpired at the HBOS Reading branch in order to create a more transparent environment and regain customer confidence.
However, the recent leaks from the internal report have put a question mark upon the intensity of the efforts being carried out by the banking group into the matter.
But it may not be the fault of the banking group at all, considering the many regulatory processes which are involved and currently ongoing. Still, that does not exempt the bank from releasing a clearer statement highlighting exactly how far the investigation has progressed.
Other Organizations Under Scrutiny
It’s not just the Lloyds Banking Group which is under public scrutiny these days. Recently even the FCA drew criticism for not placing enough controls on senior bankers in light of the rigging scandal of the Libor interest rate.
The Royal Bank of Scotland was also not safe from drawing public ire regarding its Global Restructuring Group’s treatment of customers who are operating small businesses.
However, the situation in the banking sector is improving. An Independent Commission on Banking exists, as well as a Parliamentary Commission on Banking Standards.
Hence, we can expect massive improvements in the regulatory environment of the banking sector, as well as some major changes on the structural level. Of course, these expected changes will take time to materialize.
There is something to learn from Australia in this aspect. The country has adopted a royal commission which is dedicated to look at the misconduct of the banking sector, even though the Australian Prime Minister and the banks had initially said the move to establish such a commission was unnecessary.
The move is now welcomed, as it is expected to help improve the banking industry after years of multiple scandals have damaged its reputation especially in the eyes of the public.
Perhaps a similar sort of an overarching commission is required in the UK as well, one which aims to restructure the entire banking sector to make it more focused on the interests of the public, especially those whose livelihoods depend upon a trustworthy banking system, such as those who are operating small businesses.
An absence of such a commission will continue to damage the banking industry, and with that society at large since small business owners will find it difficult to locate other ways to fulfil their banking needs.
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