LONDON Oct 29 Britain's banks are on the way to delivering a more "socially useful" banking system after becoming a focus of public anger in the financial crisis, the Bank of England's director of financial stability said on Monday.
Andrew Haldane told a meeting organised by Occupy, the campaign group seeking to reform finance, it had played a key role in changing attitudes.
"I want to argue that we are in the early throes of such a financial reformation," Haldane told the event in London.
Key reforms, such as changing banking culture, forcing lenders to hold more capital, more competition and reining in big bonuses, were all starting to have an effect.
It was important to punish negligence and criminality and this is being done after Barclays admitted manipulating a key interest rate and several lenders are collectively paying 10 billion pounds in compensation for mis-selling loan insurance, he said.
But there was a limit to what could be achieved through a "heads on sticks" strategy as problems lay in the system itself and the reforms were underway.
"A number lack the pizzazz of a 'tar and feathers' strategy. But taken together, I think they amount to the most radical agenda of financial reform for 80 years. Importantly, I also think they will work," Haldane said.
The new heads of the UK's biggest banks have committed to restoring trust in their institutions and improving their social usefulness, he told the event held in Friends House, the London Quaker society building.
"And those words are beginning to turn into actions. Barclays and today Lloyds are seeking to change their sales-oriented culture, returning to their Quaker roots. There is the quiet, but unmistakable, sound of a leaf being turned."
"Occupy's voice has been both loud and persuasive and that policymakers have listened and are acting in ways which will close those fault-lines," Haldane added. But he urged caution about tarring the whole industry with the same brush.
There are 400,000 people employed in banking in Britain and the vast majority were not driven by greed and were not negligent, he said.
"Nor, even in the go-go years, were they trousering skyscraper salaries. It is unfair, as well as inaccurate, to heap the blame on them."