Bishop joins effort to restore faith in UK banking system

Dame Colette Bowe has assembled a diverse board including a bishop, a philosopher and a trade unionist to oversee the task of restoring trust in Britain's scandal-plagued banking sector.

The chair of the Banking Standards Board, created last year to promote high standards in the sector, told the Financial Times that the calibre of people she had recruited showed it was serious about being "a catalyst for change".

Lord McFall, the former Labour chairman of the Treasury select committee and a vocal critic of banking misconduct, is to become deputy chairman of the new body.

He will be joined on the board by Sir Brendan Barber, the former general secretary of the Trades Union Congress, Reverend David Urquhart, the bishop of Birmingham, and Baroness O'Neill, the philosopher.

Describing the BSB as neither a quasi-regulator nor a trade association, Dame Colette said: "The space we inhabit is a space no one occupies at the moment, except for the top leadership of the banks, who are all thinking about culture."

She said "people have lost trust in banking" after a string of scandals, including manipulation of the Libor interest rates and rigging of foreign exchange markets. "We will be looking at bank remuneration structures and the messages these send to their own workforces."

Other directors include Paul Johnson, director of the Institute of Fiscal Studies, Gillian Guy, chief executive of Citizens Advice, and Baroness Rice, the former chairman of Lloyds TSB Scotland.

The rest of the board is made up of "practitioner members" drawn from the banking industry. These include Antonio Simoes, head of HSBC UK, Craig Donaldson, chief executive of Metro Bank, and Alison Robb, group director at Nationwide.

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Mark Carney, governor of the Bank of England, who chaired the panel that appointed Dame Colette, said he expected the BSB to "make significant progress on establishing high standards and restoring trust in the banking sector".

Laying out her plans, Dame Colette said the new body would perform two key functions. One was to "define standards of good practice", such as on whistleblowing or pay structures. The other is to ask banks to appraise their own cultures and to publish these findings as well as an assessment from the BSB in their annual reports.

She said the body would point out when a bank was falling behind its peers on a specific issue in its annual assessment, but it would not "name and shame" individual banks. "We will not be publishing league tables," she added.

The body was created a year ago by the seven biggest UK lenders in response to calls for improvements by the Parliamentary Commission on Banking Standards, of which Lord McFall was a member.

"You need something like this. It is a welcome addition and should be a useful complement to regulation," said Oliver Parry, senior corporate governance adviser at the Institute of Directors. "But if there is another banking crisis, will this body be held accountable for it?"

Dame Colette, a former head of telecoms regulator Ofcom, took over from Sir Richard Lambert, the former chairman of the CBI business group. Sir Richard, also a former editor of the Financial Times, was appointed by the banks to get the body off the ground.

She has recruited Alison Cottrell, a top Treasury civil servant and former banker, to be chief executive from May.

Peter Hahn, a senior fellow at Cass Business School, said: "There are so many groups out there representing the banks, one more won't make any difference to the public who have lost faith, but it could be important for politicians."

The £10m cost of setting up the BSB will be funded by the banks. But Dame Colette said: "The banks know that it has to be seen as independent from them and it cannot be seen as their creation."

She added: "It is a big road and an uncomfortable one. Truths are going to have to be told and people won't like what they hear."

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