Cable: Financial crisis has made banks worse

Monday, 19 July 2010 12:00 AM

By politics.co.uk staff

Vince Cable has attacked the banking sector's ongoing 'rip-off' culture as he raised expectations about the extent of impending reform.

The business secretary said the bonus culture and banks' continuing enthusiasm for charging high levels of interest for authorised and unauthorised overdrafts suggested the sector had not learned the lessons of the 2008 financial crisis.

"When we talk about restructuring the banks what's going to come out of this is a more competitive system where the customers are not ripped off," he told BBC1's Panorama programme, to be broadcast tonight.

"One of the negative side effects of this crisis is that our banking system that was already very concentrated is now even more concentrated so there's less competition, less choice and bigger temptation for banks to earn margins at the expense of their customers."

The Liberal Democrats' outspoken rhetoric against the City before the general election does not appear to have been mollified by power. The coalition government's commission on banking reform is investigating widespread changes, including separating high street banks' retail and investment arms.

Dr Cable said bankers' bonuses continued to be "unacceptable" and added: "That is something we want to try to stop and that reflects the lack of moral compass."

Tags:
• banking crisis
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• economy
,
• economy and finance