In his excellent exposÃ© of banking culture (You’ve been bankered, G2, 3 July), Aditya Chakrabortty says that Manchester University’s Centre for Research on Socio-Cultural Change revealed that three-quarters of the working lives of the Bischoff committee, which was tasked with examining the outlook for finance, had been spent in banking.
Yet many parts of the media have made snide comments that the Co-operative Bank was run by, among others, a nurse, a vicar and a plasterer, so how could it possibly take over a substantial chunk of Lloyds? Had these respectable trades been present on, for example, the board of Barclays, it is inconceivable that they would have made as bad a fist of it as the existing banking mafia. What these lay people did consistently over the years was to ensure no bailout from government was needed at any time, and their lending never exceeded funds available.
The answer to “what on earth will it take to change British banking culture?” is an exodus by individuals and companies from the guilty to the ethical. Loss of market share is one of the key indicators that motivates any industry, and losses here cannot fail to shake the complacency of the banking establishment.
â€¢â€ˆEthical banking is more than just an opportunity to change the way we manage our finances (Teach the banks a lesson by moving your money now, 5 July). It is a chance to inject a social conscience into banking. Unlike traditional financial institutions, schemes such as Your Credit Union, Kensington & Chelsea â€“ pioneered by a feasibility study from the Octavia Foundation â€“ will focus on investing in projects locally, so money stays in the pockets of members, rather than private shareholders.
Almost a quarter of all residents in the borough are marginalised from mainstream financial services and are frequently at the mercy of payday lenders, pawnbrokers and illegal loan sharks, often paying extortionate borrowing rates as high as 2,000% APR. This not-for-profit financial service aims to provide local people with an opportunity to save and borrow using a fair, affordable and local service. This defines the acceptable face of banking.
Director, Octavia Foundation
â€¢â€ˆAs vice-chair of the National Institute for Health and Clinical Excellence, I read Polly Toynbee’s article on membership of boards with more than a passing interest (The Barclays ethos infects our culture. Purge the board, 6 July). I know that the time needed to fulfil my tasks in this role can take up to two days in my week. I note that some City board members can have a role on up to 12 boards. How do they fit it all into their working week and how can they justify their role as custodians of proper scrutiny for each one?
Dr Maggie Helliwell
Keighley, West Yorkshire
â€¢â€ˆPolly Toynbee’s article is excellent, but the real cause of the financial crisis was the decision to discard a prudent accounting system in the mid-2000s. Until then, accounting in this country was based on the UK GAAP (Generally Accepted Accounting Practice), where profits could only be taken when they were earned. UK GAAP was replaced by IFRS (International Financial Reporting Standards), where assets are not valued at cost, but at “fair value”, which is a theoretical valuation assuming favourable market conditions. This would not be so bad were it not for increases in theoretical asset valuations being taken as profit in the income statement. Thus unrealised profits are taken into the income statement from which bonuses are paid, although no cash has been generated to support them. Imprudent accounting is the real problem.
â€¢â€ˆIt is the decisions of parliament that have led to banks’ unruly behaviour. Parliament deregulated lending and rents, and allowed the free movement of capital in and out of the UK. It was as if Moses flipped, went back up Mount Sinai and deregulated the Ten Commandments in the name of freedom, and was then puzzled by the increase in theft. Better political leadership and the implementation of rules that enable markets to function in the interests of us all seem long overdue.
Rev Paul Nicolson
Chair, Zacchaeus 2000 Trust