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Minister 'furious' over bank 'rip-off'

Building Societies Association | Building Societies Association

3 min read Partner content

A Tory Minister has launched a scathing attack on parts of the banking sector, saying the Government was "furious" with institutions implicated in Forex manipulation.

The Economic Secretary to the Treasury, Andrea Leadsom, told senior industry figures at the Building Societies Associationannual lunch that she wanted to move towards a system where banks put customers first.

She added that it was an “excellent opportunity” for building societies, who were not involved in the scandal, to step in and offer an alternative for customers.

The comments came as six major banks were yesterday fined £2.6bn by regulators in the UK and US over allegations that they manipulated foreign exchange rates.

Ms Leadsom said the Government wanted “a highly competitive banking system, where banks really have to lie awake at night, wondering how to serve their customers better. Not as some might think on yesterday’s news, how they can perhaps rip them off more effectively.”

Warning that the financial services industry had a long way to go to restore its reputation following the 2008 crisis, she added: “By contradiction, the building societies are looking pretty good at the moment.”

The Treasury Minister said she wanted to see building societies “flourish” as part of a diverse finance sector, which encouraged saving over borrowing.

“We want to incentivise a saving society, where people's first instinct is to save up for the things they want, rather than putting them on the never-never,” she said.

“We desperately need diversity amongst our financial institutions; it is that which gives customers choice and decent service. Competition and choice in financial services is certainly my personal mantra, and the Government is committed to it.”

Ms Leadsom told members of the BSA, which launched its manifestotoday, that they had benefited from having low-risk business models and an ethical outlook, urging them to “sell yourselves as the good guys”.

The document calls for a "fair deal" for consumers and a "level playing field" for mutually owned companies and shareholder controlled organisations.

The minister also called on building societies to play a role in improving financial education in schools. She said it was “absolutely appalling” that children were leaving school without understanding how a mortgage worked or what APR was.

Also speaking at the event, BSA chairman David Cutter paid tribute to a number of Coalition Government policies, including the help-to-buy scheme.

He highlighted the Treasury’s negotiation of the EU deposit guarantee scheme, calling it a “massive win” for the UK and the financial sector.

However he warned there were “several reform agendas that could gradually throttle the whole mutual sector”.

“We all know that change is necessary, but let's make it proportionate and customer focused.”

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