AS if the public needed further excuse to bash the banking industry, a series of jaw-dropping scandals over the summer has left the sector with an even greater mountain to climb to restore its tattered reputation.
At the heart of the controversies was the firestorm surrounding Libor – the interbank lending rate that Barclays and UBS traders sought to manipulate for their own personal gain.
But with the compensation bill for mis-sold payment protection insurance (PPI) soaring ever higher, further mis-selling claims surrounding complex financial products and dodgy dealings with Iranians and other rogue states, shame was in plentiful supply.
The Financial Services Authority (FSA) and two US regulators dropped the Libor bombshell in June, unveiling a combined £290m penalty against Barclays.
A number of traders were found to have altered rates to boost profits and bonus rewards, while the bank was also accused of lowering submissions in a bid to alter the perception of its finances ... specifically that it was healthier than it actually was.
The claims ultimately led to the resignation of Barclays boss Bob Diamond, sparked a criminal investigation and became the focal point of a bitter row in Westminster over ethics in the banking sector.
And crucially Barclays is not alone. Around 20 other institutions, including Royal Bank of Scotland, are being investigated for Libor manipulation and face hefty fines and legal costs if misconduct is found.
As it imposed its slice of £940m worth of penalties on UBS, Britain’s financial regulator said attempts at the Swiss bank to manipulate Libor were extensive and widespread, while it found traders were openly bribing and colluding with external brokers.
As the Libor maelstrom pulled in Barclays staff, Bank of England policy- makers and Whitehall officials, a new scandal emerged ... and went relatively unnoticed.
Barclays, HSBC, Lloyds and Royal Bank of Scotland all agreed to compensate customers over the mis-selling of complex financial products to small businesses.
The so-called “interest rate swaps” are complicated derivatives products that may have been sold as protection – or to act as a hedge – against a rise in interest rates without the customer fully grasping the downside risks.