Earlier this month the country watched as news of the Barclays rate-rigging scandal surfaced and quickly became the top story across every news network. The scandal is only one in a long line of revelations and instances of incompetency that have been unveiled across the UK banking sector in recent years and consumers have started to vote with their feet as applications to alternative ethical banking providers soar.
Alongside Bob Diamond’s resignation on the 3rd of July came the news that Mervyn King had been instrumental in the decision. The Bank of England is said to have put pressure on Barclays due to a loss of support from the city regulator, the Financial Services Authority.
The Bank of England’s involvement has been met with a mixed response. Some feel that they have a responsibility to the British economy and people to ensure an ethical financial system, while others feel that their involvement was unjustified and epitomises a broken and unstructured system that is in urgent need of evaluation and improved regulation.
The London Inter-Bank Offered Rate (LIBOR) rigging scandal has left Barclays’ reputation sorely tarnished as polls show consumer confidence in the bank to be at an all-time low.
Earlier this year the bank was criticised for its accounting practices and the way it managed its tax affairs. This series of errors has led to a lack of trust from both customers and officials.
The media has portrayed the bank as greedy and reckless and Chancellor George Osborne has cited the resignation as an opportunity to create a new culture, not on at Barclays, but within British banking in general.
Bob Diamond has been cooperative and has given up his bonus, which will aide Barclays’ plight even though there is a suggestion that he would not have been entitled to the bonus in the first place.
According to employment solicitors in Crewe, there is a need for constant review of employment policies as legislation is constantly evolving. Whether Diamond decides to take or pursue any legal advice regarding the pressure from Mervyn King or Barclays’ handling of his departure remains to be seen.
Mr Diamond has expressed concerns about the impact of media coverage on his own reputation and that of his family.
Questions have been raised about whether there needs to be a complete clear out of the senior management team to enable the bank to regrow consumer confidence by publicly marking a change in direction.
There will also be an independent inquiry and possible criminal charges brought against Bob Diamond and other members of the group.
As the investigation continues, it is likely that there will be more resignations as other banks involvement in rate-fixing are exposed.
Barclays now has to come up with a damage limitation strategy as investigations are likely to take several months. The British public wants banks that can be trusted. Banks that operate an open, honest culture.
One strategy may be to involve customers in the shaping of a new moral code and leadership team. They may also wish to formulate a customer charter as Royal Bank of Scotland did a few years ago, outlining their commitment to improvement.
This post was written on behalf of Hibberts who are also commercial solicitors for businesses looking to resolve or advice on conflicting issues.