Darling to launch latest crackdown on bankers who 'don't get it' next week

By LUCY FARNDON
Updated:

Alistair Darling will next week be cracking down on the bankers who 'just don't get it', as he fast-tracks the Financial Services Bill designed to bring the banking sector into order.

Alistair Darling

Getting tough: Alistair Darling wants to rein in the dangerous bankers

But the Chancellor is likely to call for a more fundamental cultural change within the banks, arguing that regulation alone won't prevent a repeat of the problems that led the economy to the brink of disaster.

The government and authorities are becoming increasingly frustrated that many top bank directors still don't seem to have accepted responsibility for the crisis. 

Nor have they implemented radical reforms and still seem intent on handing out megabonuses.

'The whole world is angry about it but they just don't get it,' Darling said in an interview with the Wall Street Journal this week.

'There are far too many people in the banking world who haven't caught the change in sentiment.'

The Treasury is keen for the Financial Services Authority to take a tough stance when it meets banks to discuss remuneration policies over the coming weeks.

And Darling is determined that not only the state-controlled banks Royal Bank of Scotland (down 0.31 to 36.9p) and Lloyds (0.54p to 89.41p), but others such as Barclays (down 3.9p to 320.2p) and HSBC (up 12.6p to 745.25p), curb the bonus-culture. 

He says they have all benefited from the government's £1.5trillion support for the financial system: 'Yet the mentality in the boardroom seems to be to ignore the fact that everybody else in the country has helped them out.'

The Financial Services Bill will be announced in the Queen's Speech on Wednesday. On Thursday, the Bill will be published. The aim is to put it into law next spring.

Key aspects of the bill include the requirement for financial institutions to develop 'living wills'.

This will make it easier to separate risky investment banking activities from consumer banking in the event that an institution gets into trouble.

The Bill will include the new FSA code on remuneration, and make provisions for 'financial stability' to be one of the statutory objectives of the watchdog.

It will establish the Council for Financial Stability, which will formalise the process by which the Tripartite authorities  -  Treasury, Bank of England and FSA  -  monitor the financial system.

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