Bankers' fat cat culture is over, says MP
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The Lib Dem backbencher made the claim after presiding over the first parliamentary commission outside of London when top banking chiefs were grilled about their industry’s culture and practices.
As chairman of the Scottish panel for the Commission on Banking Standards, John Thurso said the evidence session would help Whitehall as it prepares to reform the industry over the next few months.
Early evidence has emerged which suggests that significant changes in attitude have curbed excesses such as the bonus culture.
"The banks have begun to understand that they can’t do business the way they used to," said the MP.
"We need to get back to a banking system that is there to serve small businesses and individuals and helps them – instead of ripping them off to make profits."
At the private morning session, the panel met with the Bank of Scotland and the Royal Bank of Scotland to discuss lending practices both before and after the worldwide financial collapse.
While putting former HBOS chairman Dennis Stevenson, who was in charge between 2001 and 2009, through his paces, it was revealed that the bank had been doing bad corporate deals.
"It’s not simply that investment bankers played fast and loose with money and nice high street bankers got caught in the crossfire," said Mr Thurso.
"What we have learned from HBOS is that a lot of its lending was actually very bad, particularly in the corporate division and relatively high risk.
"They went on lending long after others stopped, so they were getting the worst of it."
He added: "It would seem to have been an absence of proper central control of the risks that were being run."
Public sessions in the afternoon allowed a panel of representatives including from the Federation of Small Businesses (FSB) in the Highlands; Inverness Chamber of Commerce and Highlands and Islands Enterprise to present evidence on lending and to outline how businesses have been affected by the financial crisis.
"I have a strong belief that the reality on the ground throughout the United Kingdom and once you are away from the major cities is quite different from what the banks have been putting forward," said JohnThurso.
"Some very good anonymous examples were provided by the FSB and the chamber which can be used to illustrate what the situation is in this part of the world.
"The forum exceeded my expectations and was a very worthwhile thing to do."
The MP explained that prior to HBOS being swallowed up by Lloyds banking group, the government injected £28 million of equity into it.
Despite this, at the time of the takeover it was valued at minus £5 million.
"With things like HBOS, we’ve been looking in the rear view mirror," he said.
"But where the commission will end up is looking ahead out of the windshield.
"We need to look forward to make sure banking is fit for purpose for at least the next generation or two."
The Parliamentary Commission on Banking Standards was set up in the wake of the LIBOR rigging scandal.
The work of the panel will feed into the work of the main commission and will help shape both the report it will make on the financial legislation before Christmas and the report on banking standards in the new year.
