Ed Miliband talked about it. The Tax Payers Alliance support it. There needs to be a public inquiry into the relationship between the Financial industry and British society.
When the credit crunch happened those in power decided that a quick reaction was necessary. Our senior politicians committed vast amounts of tax payers money to secure a banking system that was about to fail. The impact of this commitment is severe and impacts on all of us.
The inquiry would not be an attack on finance. Finance – and professional services in general – are an important part of the UK’s economy. Although such a review needs to looks back, its purpose should not be punitive but rather to ensure that we have the soundest possible basis for our economy. A properly conducted inquiry will strengthening Britain’s role as a leading place - a safe place – to invest.
Some of the questions that need answering are:
*How did we get to a position where tax payers had to underwrite the financial system?
*Was bailing out the banks the best option or should some have been allowed to fail?
*What responsibility should finance have towards society?
*How can this responsibility be incorporated into the remuneration system?
*What are the signs that show that the risks are becoming too great?
*Should those institutions who want to take big risks be forced to pay a appropriate insurance?
*Should senior managers/board members/shareholders be liable for debts?
Such an inquiry will not be Banking’s version of Leveson. The issues are too important to leave to a unaccountable person. I will write later in the week about what form the inquiry should take, but it must have a direct line to the people – political accountability. This is why the Chancellor of Exchequer should chair it.