Speaking today at the BBA Annual International Banking Conference at The Brewery in London. Anthony Browne, BBA Chief Executive said:
Ladies and Gentlemen
Welcome to the 2013 Annual International Banking Conference, the flagship event of the UK’s flagship industry.
I am Anthony Browne, the chief executive of the BBA.
It is great to see so many of you here.
Bankers, bank regulators, and all of us – one way or another – bank customers.
We have a stellar line up of speakers –leading regulators, British and EU politicians, and the most senior industry figures.
When I came before this conference a year ago I was only a few weeks into my job.
And what a year it has been.
Not just for me, but the industry.
2013, the year that the Chancellor declared would see banking “reset”.
A new regulatory regime – the launch of the PRA and FCA. And we will be hearing from the heads of those twin peaks later
Ring-fencing of banks going through parliament.
A new governor of the Bank of England
The Parliamentary Commission on Banking Standards, the most thorough parliamentary investigation into banks for a generation, with 100 recommendations, many of them very challenging for the industry.
We look forward to hearing the governments thinking on them from Danny Alexander, the chief secretary to the Treasury
The reforms of the financial services legislation from Brussels have continued at almost breakneck speed…
…aimed at ensuring we have safer, more stable, more growth-focused banking system.
CRDIV, RRD, MIFID to name but a few. Not to forget Banking Union. The UK might be outside it, but we are not unaffected.
The two main drivers of those EU reforms – Michel Barnier and Sharon Bowles – join us later.
As I am sure we will hear today, there has been huge progress, in particular in ending too big to fail and recapitalising the banks.
There is still a lot to do on that front, for banks and regulators, to make sure the recovery and resolution schemes actually work.
But are concerned about the impact of international inconsistency in regulation – between the US, the EU and UK and others. This isn’t just a problem for the banks, but for their customers.
On your seat you should find a copy of our report out this week, Beyond Boundaries, which suggests a number of reforms to ensure more international coherence of regulation.
Over the past year, I have heard many shocking things said about banks. Too often with good reason.
But one of the most shocking comments I heard was a few weeks ago during the party conference season.
It was at a round table with a renowned economist, on alternatives to bank finance for SMEs, given that banks are “refusing to lend”.
Then a Northern business leader cleared his throat ostentatiously and declared: “Actually I think that banks have been doing a really good job.”
The whole roundtable was stunned into silence.
Now some of you may think I should have this businessman stuffed and put on display in my office, to remind me of “the person who once said something nice about banks”.
But I have not done so.
Not least because finding people with positive things to say about our industry is becoming just a little bit easier.
At all three of this year’s party conferences I noticed that the climate is starting to change for Britain’s banks.
This isn’t simply because memories have started to fade or some notion that another industry is now fair game.
The real reason is that our industry is changing and - crucially - is being seen to do so.
It comes at a time when two of the biggest drivers of public sentiment have reached a turning point:
First, we are no longer in recession. The economy is improving
Second, taxpayers are starting to get their money back. The first sale of shares in one of the banks shored up by the taxpayer has been a like a pep pill for the whole industry.
Last year, our main conference theme – in the wake of the LIBOR scandal – was the need to restore trust and confidence in the industry.
That is still our number one priority at the BBA. We are in this for the long haul.
But this year our broad conference theme is that as an industry weare making headway.
There is much, much more to do, but we can claim to be making progress on the issues that matter most:
- Helping customers
- Promoting growth
- Raising standards
Helping Customers
Many of the leading figures in the industry have admitted that they lost sight of their customers. The billions paid in redress for retail misselling show they are paying the price.
It is because the industry needs to regain sight of the customer that the BBA set up a consumer panel, to help bring banks and consumer advocates closer together.
Progress is being made.
Sales bonuses that might have encouraged mis-selling are being stripped out of retail banking.
A few weeks ago, the current account switching service was launched, taking the fear and hassle out of switching accounts. It shows that banks are not afraid to promote competition.
Further evidence of that is provided by the development of challenger banks, offering more choice to the consumer.
Banks are preparing to launch a suite of straight-forward new financial products – kite-marked simple products, which do exactly what they say on the tin, with no hidden details in the fine print.
This is good for customers, and good for banks, helping to restore trust.
Customers are also benefitting every day – indeed every second - from technological innovation.
Thirty years ago, when I was a teenager, customers were obliged to queue up on Friday afternoons before the banks closed at 3.30pm to withdraw their money for the weekend. Often the money ran out.
Now we have a network of 64,369 cash machines. Telephone and internet banking gives customers access to bank service 24-hours-a-day.
The BBA’s latest statistics show that there has been a 26 per cent rise in bills paid online over the past year.
The statistics are mind-boggling. Every minute 2,400 customers email a query to their bank, and over 4,400 check their balance online.
Mobile phone banking is now sweeping the nation at incredible speed.
While sitting listening to me, you could take out a loan on your smart phone, or pay off a debt to your friend. You could even pay your BBA membership fees.
Progress is being made in other areas. The banks are putting vast amounts of money and effort into resolving complaints, and that is starting to pay off.
It is great news that yesterday the FCA reported that complaints against banks are down nearly 20 per cent year on year.
That is real progress.
Of course, complaints are still too high overall.
As I am sure the consumer groups and financial ombudsman who join us today will remind us, there is still much to do.
Promoting growth
When it comes to the economy, signs of a robust recovery are gathering.
That’s likely to be confirmed by the first release of third quarter GDP figures next week.
Despite the headlines, the banks have been playing their part in this return to growth.
A good example of our role in the recovery is illustrated by the mysterious graph in front of you.
Can you guess what it is?
It shows double digit growth rates of over ten per cent year on year.
No, it's not the growth of house prices in central London.
It’s not bank bonuses – they have more than halved, by the way.
Some of you may be shocked. It’s probably a good thing that you are all seated. You won’t have read it in the papers, but that upward chart is actually bank lending to SMEs.
To those who say “banks are refusing to lend”, this graph proves the opposite.
They are from the latest Bank of England figures, and showing the growth in gross lending – that is new lending - by banks to SMEs.
It is £10.5bn over the last three months, an 11pc increase on the amount of new lending for same three months last year.
How can this be, I hear you ask?
Well, what usually only gets reported is net lending. Which is down. And misleading.
Net lending is down because many SMEs are deciding to pay off their existing debts - which presumably they are doing because it is good for them.
New lending is growing, but it is outpaced by debts being paid off.
The reality is: more lending to SMEs who want finance, more SMEs paying off their existing debts.
That’s the real story and it’s good news.
And the BBA is doing its bit.
The Appeals Process we have introduced is working.
Any SME that feels it has been unfairly turned down for credit can appeal to an independent adjudicator. In 40 per cent of cases the appeal has been successful, and the business gets a loan.
The scheme is helping SMEs who need money to get it.
That’s why we are significantly upping our efforts to raise awareness of it.
We need to break the downward spiral of confidence that currently exists around lending. Independent research clearly shows that small firms are actually twice as likely to get a loan from their bank than they think.
Insisting that banks are refusing to lend when the opposite is true just fuels that viscous circle.
The message that we need to get out is that banks are open for business, and there has never been a better time to borrow.
Raising standards
Clear evidence of the recovery helps underline that our country is entering a new phase.
The same is true of standards in banking.
The report of Andrew Tyrie’s Parliamentary Commission on Banking Standards published a few months ago has many bold recommendations to improve professionalism and accountability.
One of the key ones was for the industry to set up a standards board to professionalise the industry. The main UK banks have asked Sir Richard Lambert to begin work on this important project.
The industry is fortunate to have such an experienced and widely-respected intellect working on such a challenge.
Final thoughts
Even though these changes are just beginning, confidence in our industry is – very gradually - starting to return.
It is important to everyone that it does so.
You need a healthy banking industry to have a healthy economy, and you need a healthy economy for a healthy society.
And after all the reforms have been passed, what the industry needs to be healthy is a period of stability and delivery.
A time to consolidate and rebuild.
Over the past year, a lot has been done.
Complaints are down, bank lending is up. Stability is being built into the system.
But in the years ahead there is a lot more to do.
We must continue to make headway.
To improve the way we care for customers. To foster growth. To raise standards.
Thank you
