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The government has done almost nothing to deal with the fundamental and ongoing causes of the financial crisis, a leading academic has warned.
University of Essex banking expert Professor Prem Sikka maintains that the risk taking, insider trading, money laundering and mis-selling that characterised banks’ behaviour prior to the 2008 crash is continuing.
In his new paper Banking in the public interest: Progressive reform of the financial sector, Prof Sikka accuses the coalition of stalling on vital reforms to drag the banking industry back into line.
He said: “The government has made noises about addressing the problems of the financial sector. But as this year’s bonus season demonstrates, in practice very little has changed.
“Financial institutions have been allowed to continue the reckless gambling and anti-social practices that devastated the economy in 2008.
“The financial sector impacts upon every part of the British economy. The government must stop evading the necessary task of implementing significant reforms to the banking industry.”
Prof Sikka is calling for a number of changes including the separation of retail and speculative banking, as well as the withdrawal of limited liability from speculative banking — meaning bankers would be held fully financially liable for reckless gambling.
Prevention of retail banks from launching any financial product without express approval from the regulator should also be enforced.
The paper goes on to advise the publication of the terms and conditions of executive renumeration packages and a binding vote on them by employees, savers and borrowers.
