Britain's banking system is to be investigated by a cross-party group of senior MPs which plans to draw up proposals to put the wider interests of society at the heart of a reformed banking sector.
The Future of Banking Commission is to include John McFall, Labour chairman of the Commons Treasury Select Committee, Vince Cable, the Liberal Democrats' Treasury spokesman, and the former shadow Home Secretary David Davis, who will chair the commission,
Writing in The Independent today, Mr Davis says that previous inquiries into the financial crisis have focused on "trying to fix the broken financial machine" rather than creating a system that is "fit for purpose".
He said last night: "All of the recommendations on banking reform to date have understandably been by bankers, of bankers, and to some extent for bankers. It is past time that we had a proper analysis of banking from the perspective of the people they serve, the savers, borrowers, and businesses that make the economy work."
The Future of Banking Commission, backed by the consumer group Which?, will stage a "big banking debate" in the new year to give ordinary people a voice, and will hold three public hearings to get the views of business leaders, trade unions, bankers, politicians and regulators, before drawing up a new blueprint for the banking system.
Other members of the commission include Philip Augar, formerly a group managing director at Schroders, Clare Spottiswoode, former director general of former Ofgas, David Pitt-Watson, chairman of Hermes Focus Asset Management and Roger Bootle, managing director of Capital Economics.
The idea was suggested by Mr McFall. He said yesterday: "The banking crisis has had such a profound effect on people, that we believe their views and concerns must be at the heart of banking reform. There is a social dimension to the crisis and bankers, regulators and politicians need to understand and take account of these concerns."
However, the banks may resist moves to impose new controls over their operations. Some bank bosses, including Stephen Hester, the chief executive of the majority state-owned Royal Bank of Scotland, are complaining about too much political interference – even though the banks were thrown a lifeline of share purchases loans, guarantees and insurance estimated at £850bn by the National Audit Office (NAO). Bankers resent the Government's decision to impose a 50 per cent super-tax on bank bonuses over £25,000, even though it enjoys the support of four out of five members of the public. The move has prompted warnings that some firms may pull out of the City of London and relocate abroad.
Research by Which? found that eight out of 10 people do not believe the banks have done enough to ensure that the credit crunch does not happen again, and six in 10 do not think the banks have learnt their lesson from the crisis. Peter Vicary-Smith, the chief executive of Which?, said previous reports had all been written from the perspective of bankers. "We want to ensure that, for the first time, the strong feelings of the general public are finally heard and acted on," he said.
Mr Cable said: "It is high time that the voices of consumers were recognised in the debate over the future of the country's banking services, not least since the banks owe their continued existence to the taxpayer. I hope the commission will go some way to recovering the trust between banks and the people they serve."
Future of Banking: On the agenda
*Banking's social function
*The impact of the financial crisis on the public
*An appropriate structure for the banking system
*Aligning the interests of consumers, banks, investors and other stakeholders
*Ensuring that competition, particularly in high-street banking, delivers benefits for consumers
*The withdrawal of state aid from the sector
*Effective corporate governance, accountability, linking pay and bonuses to fair treatment for customers, and avoidance of rewards for taking excessive risk.
*Regulation of the industry
*Provision of suitable products with fair charging structures
*Impact on customers of any proposed reforms.