Richard Lambert the Director General of the CBI put the boot into Britain's financial services industry yesterday, by likening the regulatory system's failure in its handling of the crisis at Northern Rock as akin to something from a "banana republic."
Quote:
"Outside the movies, a run on the bank is something that happens in a banana republic.
That one should have happened, under our noses, in a mature and prosperous country like the UK, is almost unimaginable."
He poured scorn on the tripartite system, whereby financial regulation is split between the Treasury, Bank of England and the Financial Services Authority, saying that it had "failed to deliver the goods" and needed to change.
Adding that the Bank of England's lender of last resort facility should be reassessed, and rules governing how deposits are protected must also be overhauled.
Quote:
"No institution will ever go down that route again if it remains unchanged. What happened to Northern Rock is just too grim a precedent."
It all comes down to confidence in the system, regrettably as a result of numerous scandals (endowments, pensions, bank charges, over zealous lending etc) people in Britain have totally lost in the financial services industry.
It will take more than a revamp of the tripartite system to restore that confidence.
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