The FINANCIAL — Ten of the world’s leading banks have racked up fines and similar "conduct costs" of nearly £150 billion over a period of just five years, according to a new analysis published by the London School of Economics and Political Science (LSE).
The researchers, led by LSE Professor Roger McCormick, assessed the costs accrued by ten of the world’s leading banks across the UK, Europe and America as a result of misconduct. When put together, and reviewed over the period 2008-2012, these ten banks alone incurred nearly £150 billion for misconduct of various kinds, including mis-selling PPI and other products, manipulating LIBOR, and failing to observe anti-money laundering rules.
“This league table allows the public for the first time to view an independent, objective set of figures which relate in one way or another to bank behaviour over the five years ending December 2012 (including provisions as at that time). The banks ranked here are all household names. The fundamental question is: can we expect these costs to start going down soon if these banks now have sound ethical cultures? If not, why not?" said Professor Roger McCormick, who led the LSE Conduct Cost Project.
“Banks are required by regulators to "know your customer" (KYC) and, in any event, they can't help knowing rather a lot about us simply by virtue of the fact that they know a lot about our finances and what we do with our money. But do we know as much as we should about them? Is it time for more "KYB"?" he added.
“If we knew more, would we be more choosey about who looks after our money? We may moan about the banks but, as things are, we seem to be fairly docile customers, slow to change accounts, however disgruntled we may feel about banks in general. This is partly due to inertia —it's seen to be something of a hassle to change banks when compared with, say, trying a new brand of washing powder. But it's also due, at least in part, to the lack of readily available, accessible information about just how "good" or "bad" banks actually are. Notwithstanding the ongoing scandals, they say they are (at last) trying to be more ethical than in the past and determined to "restore public trust". How can we test that? Is it just the latest PR message or is there some substance to it?" he added.
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