Miliband Wants Banking 'Revolution'

RELATED QUOTES

SymbolPriceChange
RBS.L303.80+2.70
MPSLTD.BO395.40-5.55
BARC.L252.00+3.10
HSBA.L613.00+0.80

Ed Miliband is expected to demand Britain's biggest high street banks be broken up when he sets out plans for a "revolution" in the banking industry this week.

The Labour leader will call for Britain's five main banks - Barclays (LSE: BARC.L - news) , HSBC (LSE: HSBA.L - news) , Lloyds, RBS (LSE: RBS.L - news) and Santander - to be forced to sell-off up to a thousand branches in a speech on Monday.

It would pave the way for two privately-run "challenger banks" to be set up, creating extra choice and competition and potentially reducing banking charges for customers.

Mr Miliband told The Mail On Sunday he also wants banks to do more to help small businesses and to stop selling complicated and often risky products to customers.

"We need a revolution in British banking," he said.

"Banking used to be a term of endearment. John Major was a banker. It wasn't an insult, it was a compliment."

He also talked about some of the people he had met who have been affected by the banking scandal.

"I visited a guy called Alan who runs a signage company in Putney. He was in tears. It's a chilling story about what the banks are doing to people.

"He has lost about a £1m because of the banks. He got sold a 'dual interest rate swap'. I have a master’s degree in economics and I can’t understand it."

Mr Miliband is also expected to set out plans for a tough code of conduct for those caught fiddling the system, including lifetime bans for dishonest bankers.

A body similar to the British Medical Association could be set up to regulate the banking industry and ensure certain standards are maintained.

And he will set out plans for greater transparency that would force banks to reveal who they are lending money to.

Backing Mr Miliband's proposals, shadow chancellor Ed Balls told the BBC's Andrew Marr Show that the banking sector needed a "root and branch review" and said the Government was "dragging their feet".

"It's also about the culture of banks," Mr Balls added. "There's no proper code of conduct. It's not enforced. Bankers can do what they get away with."

Mr Miliband has also promised to continue fighting for an independent inquiry into the Libor rate scandal, despite MPs (BSE: MPSLTD.BO - news) voting instead for a parliamentary investigation.

Three top executives at Barclays, including chief executive Bob Diamond have resigned after the bank was fined a record £290m for attempting to manipulate the inter-bank lending rate.

Mr Miliband said: "I think this narrow inquiry will be inadequate. We will co-operate with it because Parliament has voted that way and therefore, I think it is the right thing to do. I'm not going to defy the will of Parliament.

"But I will continue to press my case for the open inquiry I think we need because I think it is still what the circumstances demand."