The shocking tale of Lloyds' mis-selling culture ended with a deserved £28m fine. But not one person was singled out for blame. As Iceland shows, that's got to change
Spare a thought for Chris Willford. The former finance director of Bradford & Bingley was last week stung with a £30,000 fine for his actions during the banking crisis. The City regulator, the Financial Conduct Authority (FCA), found that for three days in May 2008 he failed to do his job properly because he did not tell the board of the cash-strapped bank that its finances were deteriorating.
At the time, the bank was in the midst of a rescue cash call that eventually failed. Four months later it was part-nationalised and partially taken over by the UK arm of the Spanish bank Santander. It was an oversight for which he is rightly being penalised. So why the sympathy?
Well, Willford is one of only a handful of bankers to be punished for their actions during the financial crisis. None of the bosses of the banks bailed out during that time – B&B included – has faced any charges from City watchdogs.
Admittedly Fred Goodwin – stripped of his knighthood – will not expect the City regulator to authorise him to take a job in finance again. Andy Hornby, the former boss of HBOS, has gone into bookmaking – via a chemist – rather than seek out another career in banking.
But will this quench the public appetite for the buck to stop at the top of failed organisations? Probably not.
While the clamour for bankers to be sent to jail may appear undignified, look at the situation in Iceland. The former chairman and chief executive of the collapsed bank Kaupthing were last week given a five-year jail sentence.
Both Hreidar Mar Sigurdsson, the former chief executive, and his chairman Sigurdur Einarsson are expected to appeal against their convictions for fraud and market manipulation.
But still, Iceland is unique in punishing its most senior bankers in such a public way and securing convictions. It may be that the crimes were easier to understand – in Kaupthing's case it related to a loan the bank gave to a Qatari sheikh to buy 5% of its own shares – but still it helps to sate the demand for top bankers to take the blame when things go wrong.
This was one of the themes pursued by the parliamentary commission on banking standards and then taken up by the Treasury select committee, which has battled in recent weeks to convince a succession of former managers of the Co-operative Bank to take responsibility for its near-demise.
This week new rules requiring top bankers to be accountable for their actions are expected to become law. A new offence of reckless misconduct, for bankers who run their institutions into the ground, will also be introduced.
There are those who say the new law will be impossible to enforce. Even so, it may yet prove to be a deterrent to any banker whose management strategy is growth at any cost. Just think of the sales advisers at Lloyds Banking Group. One of them was so terrified about being demoted that he sold himself a financial product. He did not stop there. He sold one to his wife and his colleague to achieve sales targets. This culture was exposed last week when the bank was fined a record £28m.
The FCA shed light on a brutal six-tier salary structure at Lloyds in which advisers could automatically be demoted if they failed to reach sales targets. The bank paid bonuses even when it knew that the customers were being sold products they did not need.
It is a shocking affair. So, on whom did the FCA pin the blame? There's the problem. Not a single individual at Lloyds is named by the regulator. Instead the firm is fined for serious failings in its systems and controls. That cannot be right.
Eurozone festivities? Don't bank on themDecember is a time for clearing the decks as well as decking the halls, so tThere is a satisfying completeness about Ireland's formal exit from its bailout package this weekend. More than five years into the crisis, and with fellow bailout victims Greece, Portugal and Cyprus still racked with economic hardship and political instability, Ireland is a welcome success story for the eurozone.
After ministers finally agreed the basics of a pan-European banking union last week, there is cause for hope that 2014 will be the calmest year since the onset of the credit crunch. Ireland certainly appears to think so, given its decision to jump free of the troika without the safety net of a precautionary credit line from the IMF.
But there's also reason to be cautious. On the agenda for the new year are a series of knotty financial and economic questions: how will debt-laden eurozone states cope with higher bond yields if Fed tapering pushes up borrowing costs? How will Greece's €4bn (£3.4bn) funding gap for next year be met – and what fresh agony will its population have to endure in exchange? Will Portugal's fragile coalition continue pushing through tough austerity measures without sparking a renewed political crisis? What happens if the ECB's "asset quality review" of the region's banks reveals black holes in their balance sheets that national governments will struggle to fill?
All these potential dramas will be played out against the background of a eurozone economy barely emerged from recession, where deflation appears a serious prospect and a rise in the value of the euro on the foreign exchanges is threatening the competitiveness of even mighty Germany.
It was these fears that prompted the ECB to deliver a surprise cut in interest rates last month, and led its president, Mario Draghi, to strike anything but a festive note, warning that – unlike the snow in the carol – economic recovery in the eurozone is "weak, fragile and uneven". Ireland's progress is cause for celebration, but doesn't mean the eurozone as a whole is destined for a happy new year.
Sometimes it pays to walk…Some bosses of FTSE 100 companies cling on to their jobs even when it seems unlikely they can survive. Think Nick Buckles, former chief executive of accident-prone outsourcing company G4S, who did not quit until May, eight months after the Olympics staffing fiasco.
There are others who go only when pushed. Think Bob Diamond, the one-time boss of Barclays, who left only after the Bank of England eased him out in the wake of the Libor scandal.
Then there is Simon Lee, chief executive of insurance company RSA. A month ago, when the insurer uncovered a problem at its Irish unit, he had looked hopeful about keeping his role. The dividend, he thought at the time, would not be threatened. On Friday, however, when the hole deepened by another £130m and assurances could no longer be given about the dividend, Lee walked. A sensible decision.
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