Yahoo Finance Bank Reform: Miliband Unveils Blueprint
Labour leader Ed Miliband has accused the Government of "failing to rise to the challenge of reforming our banks" as he set out his blueprint for fundamental reform.
Mr Miliband outlined plans for a radical shake up of the banking sector, including forcing the top five firms to sell up to 1,000 more branches to increase competition.
In the wake of the rate-fixing scandal, the Labour leader argued that the banking industry has become "economically damaging and socially destructive".
He cited the mis-selling of complex insurance products, a failure in lending to businesses and the "fleecing" of customers with payment protection insurance as further proof of its decay.
Mr Miliband, in a speech at the Co-Operative Bank which is in talks with Lloyds to buy more than 600 of its branches, called for a return to the "stewardship banking" of the past. To increase competition, he wants at least one other privately-run "challenger" bank to be given the change to break into a market dominated by the five best-known names.
Further plans include creating a code of conduct and watchdog with the power to permanently strike off errant bankers, setting up a specialist banking unit with the Serious Fraud Office, and creating British Investment Bank to help the business sector.
Amid continued controversy over a possible multimillion-pound payoff for former Barclays (LSE: BARC.L - news) chief Bob Diamond, Mr Miliband also backed EU proposals - which are opposed by George Osborne - to set a maximum 1:1 ratio of bonus to pay.
"Nobody can really believe that the current way of running things is in the interests of British business. The revelations of the last two weeks have shown precisely what has gone wrong in our economy in the last decades," Mr Miliband said.
"The rules of our economy were too frequently based on the idea that if government got out of the way and we followed the path of deregulation, we would create an economy that worked for all working people.
"In too many ways and in too many places, it hasn't worked. And the test for all of us is whether we can learn that lesson. And that starts with our banks."
Mr Miliband admitted that Labour had failed to be tough enough in regulating the banks while in power but he added: "The difference between us and the Tories is this: We have learned the lessons.
"The Conservative-led Government won't bring the change we need. They have failed to rise to the challenge of reforming our banks again and again.
"Watering down the separation between high-street banking and casino banking. Going slow on new competition in banking. George Osborne heading to Europe (Chicago Options: ^REURUSD - news) this week to argue against action on bonuses.
"Refusing a bank bonus tax. And a judge-led inquiry. Once again showing they are out of touch with where the public are.
"And most of all, they can't be the people who deliver tougher regulation because light-touch regulation is what they believe in their bones."
Mr Miliband said the banking scandal had vindicated his warnings at last September's Labour conference about "predatory" capitalism and the need for a "different kind of economy".
He claimed his proposals would pave the way "from the casino banking we have to the stewardship banking we need".
"It will mean root and branch change for our banks if we are to deliver real change for Britain, if we are to rebuild our economy so it works for working people, and if we are to restore trust in a sector of our economy worth billions of pounds and hundreds of thousands of jobs to our country," he said.
