Conference notes
a) the importance of a healthy banking system to the future of Britain’s economy
b) the regrettable failure of decades of ‘light-touch’ regulation that socialises risk and privatises extraordinary profits at the expense of sustainable investment and growth.
c) that Liberal Democrats have long emphasised the need to tackle disproportionate rewards for risky financial behaviour and the concentration of power in the hands of a few in the City of London
d) that the Independent Banking Commission is likely to postulate significant reforms later this year.
Conference therefore welcomes the aims of the recent ‘Project Merlin’ agreement with the UK’s leading banks to:
• Increase the credit available to British businesses
• Improve transparency over executive pay
• Reduce the overall bonus pool.
However, Conference is concerned that
i) the ‘Merlin’ reforms are insufficient
ii) the language of the ‘Merlin’ agreement is weak and will be hard to enforce, particularly with regards to net lending to business and transparency on bankers’ remuneration, with no disclosure requirement for the highest earners not on the Board.
Conference therefore calls on Liberal Democrats in Parliament, and most importantly those in Government, to ensure that the recommendations of the Vickers Commission are carried out promptly and in full. Conference calls for:
A) Banks supported by the taxpayer to be broken up into smaller, safer entities, with effective competition restored and full disclosure of all pay packages larger than that of the Prime Minister while they remain State-owned.
B) All large-scale banks to divest their investment banking arms, with no explicit or implicit State guarantee for this activity.
C) Pay transparency to be extended to highly paid traders and other employees, not just Executives, with salary and bonuses that exceed an agreed ratio to median salary to be published alongside an explanatory justification.
D) Large financial institutions to hold greater capital reserves and to make ‘living will’ arrangements to act as stabilisers in the event of further market failures such as those seen during the recent financial meltdown.
E) The imminent Green Investment Bank to be a fully functional bank and not a fund, securing much-needed investment in low-carbon technology and jobs.
F) Measures to tackle financial exclusion for individuals and small business, with a Basic Banking Guarantee; a public bank administered through Post Offices; a commitment from high street banks to provide fee-free ATMs within walking distance of all deprived communities; as well as reducing unfair bank, credit card and loan charges.
G) Greater support for local credit unions and mutuals.
