Imagine a small village – possibly somewhere off the M1. Food is provided from village farms, finances are dealt with by the local bank, and, typically, everyone knows each other. If the butcher started watching too much Agatha Christie and began poisoning all their food, or the bank started to mis-sell to its customers or (worst still) invest in inorganic farms in the neighbouring village, you would expect them to be severely reprimanded and probably taken out of business.
The feeling of being personally and unjustly affected would make these actions completely unacceptable to the village. Where would be the sense of community and togetherness?
Zoom out from that village and into the hard realities of this life, and It’s a Wonderful Life-esque images seem not to exist. This week the five big banks have been announcing their first-half of the year profits.
HSBC have made a $12.7bn profit since January – up $1.3bn on last year. Barclay’s profits have risen by 13% to £4.2bn. Santander’s income has risen by 8.4%. Lloyds have seen a pre-tax profit of £1.03bn. Meanwhile, the investment arm of RBS has just announced profits of £1bn with the high street division making £2bn.
These are the very same banks that have miss-sold PPIs, engaged in interest rate rigging, and engineered such a lax surveillance system that money laundering could carry on right under their noses. These banks have committed criminal activities of the highest order, and yet continue to make profit upon illegal profit, with little or no legal consequence. This wouldn’t happen in the Vicar of Dibley.
Why are the banks allowed to carry on like this? Part of the reason seems to be the feeling that we the public are powerless against the amorphous shape of the banking industry – banks are larger and more detached than they would be in a small village community. IpsosMori’s research into the banking crisis found that just 20% of people feel that there was something they could have personally done to prevent the collapse in 2008 – like switching banks. If the very people who are unwittingly complicit in the banks activities (by holding current and savings accounts) do not believe that they can affect the banks behaviour, then it is not going to be an easy task to shift the ground from under the banks’ feet.
Empowering people and making them realize that they can have an influence is the goal of the Move Your Money campaign.
Within the High Street banks there is a sense of an abdication of responsibility. Changing the way the banking industry works is not something that one person can do individually on a rainy afternoon. Although moving your money plays a significant part in the process of creating change, that change still needs to be implemented.
Currently we are looking to government to do this but this increasingly seems like a futile exercise. Especially when we consider that political parties receive the majority of party funding from the banks. Government have dished out fines to the banks for their recent behaviour, but the scale of profits that the banks have been announcing prove that monetary punishments alone are doing little to the curb their behaviour.
Why? Firstly, because treating the symptoms not the cause is no way to create lasting change. Secondly, the fines are as small in comparison to the banks profits as my feet are compared to those of Michael Phelps. HSBC, for instance, have set aside $2bn to pay back mis-sold PPIs and for the likely fines that they will incur from the money laundering scandal. The profits they made in the first 6 months of this year reached $12.7bn. The fines that they have incurred, therefore, for years of misdeeds only amounts to 15% of their profits from 6 months of trading – hardly enough to encourage behavioural change.
Finally, there is an interesting dichotomy between the ways that people perceive punishment (not a word I personally like to hear too often). Research suggests that 80% of the British public think criminal sentences are too short. Two thirds believe that reoffending occurs because prison sentences are too short or too easy. There is a cultural belief that punishment breeds better behaviour. Personally I do not subscribe to such a view but it is revealing that there is such a dichotomy between enforcing social justice onto, say young offenders, and letting the wealthy and successful off with a bit of a public embarrassment and their finances and lifestyle still largely intact.
Crime is seen through a lens of knives, gangs, and guns – not illegal activities amongst white collar criminals and big business. The media are complicit in creating this image and fear of crime by giving us wall-to-wall stories of criminal activity. What seems to be of less interest are the finer details of the unlawful and unjust activities continuously practiced by the big banks which are globally systemic, and infinitely more destructive.
As seen by the recent profit announcements – banks are allowed to continue with business as usual by the mainstream media, without facing the threat of sustained scrutiny, or regulatory reform.
Back in our imaginary village everyone would see the personal affects of illegal or unethical banking activities and would make sure that they were not allowed to continue. What we need is a national effort to demand financial reform.
Punishments and fines are not the way to do this however. Like an offender who is encouraged to see the world from a different perspective, we too need to promote the image of an alternative ethical financial system and push for holistic reforms.
As Ghandi famously remarked: ‘Be the change you wish to see in the world’. Move Your Money, tell all your friends, and lend your voice to the growing chorus demanding financial sector reform.