Banks flayed at water cooler conference

21 March 2013

The British Water Cooler Association (BWCA) heard from Rt Hon Pat McFadden, Member of Parliament for Wolverhampton, as the keynote speaker talking about his experiences as a member of the Parliamentary Commission for Banking Standards

An industry that prides itself on auditing and standards of excellence heard about an industry whose standards have been called into question.

The British Water Cooler Association (BWCA) welcomed Rt. Hon. Pat McFadden, Member of Parliament for Wolverhampton, as the keynote speaker talking about his experiences as a member of the Parliamentary Commission for Banking Standards.

The British Water Cooler (BWCA) Association annual conference was held at Chesford Grange in Kenilworth. Aptly themed ‘Power of the Past; Force for the Future’, the title of the conference could apply to banks as much as to the water cooler industry. Speaking about the banking sector Pat McFadden said: "For too long the industry has been able to operate with an implicit taxpayer guarantee that governments will step in if things go wrong. This allowed banks to gamble with other people's money and have no skin in the game."

He pointed out that banks are 'expert at getting round new rules' and 'gaming the system', saying that was why the first report of the Banking Commission recommended not just ring-fencing to protect tax-layers but 'electrification of the ring fence'. He said that Government needed to go further to put this 'electrification power' in place.

He described the effect of the current banking issue, the remit of the Commission in reviewing banking standards and culture; the economic challenges facing SME businesses; and how he believes the banking system is affecting the SME sector.
"Every company here has a relationship with a bank that is vital to the running of your business," said Mr McFadden. "That relationship is vital if we are to see the jobs and the growth that the UK needs to pull us out of recession. And we all know that in recent years this has not been easy".

"We are still living with the consequences of the financial crisis... So it just not enough to say that because the [banking] industry is big, important and contributes a lot to taxes it can never be touched or changed. Banking must operate to clear rules. Taxpayers must be protected against the dangers of its collapse. And the economy as a whole must be helped out of the credit drought that has resulted from the crisis".

He went on to argue that banks must be made safe against future risk and that this means them holding more capital than before. "Holding more capital is important as a buffer against risks," said Mr McFadden.

Mr McFadden held a role as Political Secretary to Prime Minister Tony Blair and was elected as Labour Member of Parliament for Wolverhampton South East in 2005. He is a Member of the Treasury Select Committee as well as being a Member of the Parliamentary Commission for Banking Standards, which is due to report in May.