Did you hear the one about the honest, hard-working and decent banker?

No, really, did you?

Despite this being the worst week yet for an industry that’s had more than its fair share of miserable weeks in recent years, and even in spite of the fact that the accusations against the so-called “banksters” have escalated from a lack of morality to potential criminality, there remain plenty of honest, good and moral men and women working in financial services. Many of them are even in the most senior positions

Take, for example, the old story (retold to me this week) about Lord Mervyn Davies, when he was boss of Standard Chartered. As the drama of Bob Diamond’s resignation over the role of Barclays in Libor-rigging unfolded, I was offered this wonderful insight that explains why few expect Standard Chartered to be implicated in this most serious episode of financial misadventure. It also explains why Standard Chartered wasn’t quite as exposed to the financial crisis as many of its competitors.

Some time in 2006, one of Standard Chartered’s financial rocket scientists met with Davies to let the bank get involved in the sort of complex transactions that were all the rage at the time and that were making rivals (both institutions and individuals) so rich. Davies, clearly not a stupid man, asked the boffin to explain the scheme. About 20 minutes later Davies stopped him and admitted he hadn’t understood a word. A sure sign of his intelligence and honesty was that he was confidant enough to show his ignorance (not something very prevalent in banking boardrooms at the time). He gave the boffin another go, who then took half an hour to explain his ideas in plain English. Davies thanked him for his time but still didn’t follow. He is reported to have said, because he couldn’t understand the scheme, there was no way he was prepared to let the bank get into it. Two years later that already looked to be a good call; six years on it looks like the wisest possible decision.

There is danger that this sort of story makes Davies appear something of a throwback to a much-vaunted "golden age" of banking. While this week has been bad, we must resist glorifying the past or go misty eyed over an era before the Big Bang opened the City up and all those brash Americans brought their naughty ways over here. The old City was the worst kind of closed shop. Deals – rather, gentleman’s agreements – were sewn up over lunch or a round of golf, and in this age diversity meant hiring from both Oxford and Cambridge. Women, if they were in the boardroom at all, were there to make tea and take notes.

It may have its faults, but the modern financial services sector is a rare example of a UK success story. And the whole economy benefits from a thriving financial services industry. But that’s exactly why wrongdoing (especially crime) must be rooted out and acted on swiftly. Criminality must be punished as such and all financial gains must be recovered, as they would be elsewhere.

All this requires adequate regulatory oversight and proper legal protection. It’s why the government must recognise that its Financial Services Bill is not fit for purpose as it is and needs a radical overhaul.

The good news is that there is still time to get it right. But it requires politicians to stop pointing fingers over whether light-touch, tripartite regulation caused the mess and see that the proposed twin peaks regulation is equally flawed. There are myriad specialists arguing that while politicians quibble over quantity of regulation, it’s the quality of those rules that matters. Politicians must take this opportunity to learn from other people’s mistakes and create the support and regulatory structures that allow us all to be confident of hearing many more stories about decent, honest bankers in the future.

This article originally appeared in Economia

London. Photograph, Getty Images

Richard Cree is the Editor of Economia.

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England is now a more expensive place to study than the US. Why?

Is a university education in this country really worth £44,000, and how does our system compare to higher education funding elsewhere?

England has long sneered at American universities and their exorbitant fees. It cannot do so any longer: England is now a more expensive country to study than the US, and is easily the most expensive of eight Anglophone countries – the four UK nations, Australia, Canada, New Zealand and the US – analysed in a new Sutton Trust report. English students graduating from last year left university with an average of £44,000 in debt £15,000 more than Americans studying at for-profit universities across the pond.

Why do English students have it so much worse than other students in the UK? There are two answers. The first is the government's decision in 2010 to shift much of the cost of university from the general taxpayer to the beneficiaries: the students themselves. The second answer is devolution. The devolved governments in Northern Ireland, Scotland and Wales have made political choices to differentiate themselves from Westminster by prioritising keeping fees down – even when, as in Scotland, the effect is to benefit middle-class students at the expense of disadvantaged ones. Students in Wales who study in England are eligible for generous grants, meaning they pay less than £4,000 a year rather than up to £9,000. Those studying in Northern Ireland have their fees capped at £3,925. 

Even England's £9,000 fees are puny set against those at elite American universities. In 2016/17 annual, tuition fees at Harvard are $59,550 and, when all else is accounted for, Harvard reckon each year costs students $88,600. But such exorbitant numbers are not the real story. About 60% of Harvard students receive the Harvard Scholarship: a microcosm of how US students benefit from a culture of graduates giving endowents to their old universities that is still lacking in England. Scholarships and bursaries at universities in the US are far more generous than in other countries. And those who go to public universities within their own state pay far less: those graduating after four years leave with an average debt of only US$27,100 [£19,100]. This is why the average debt of US graduates is now considerably less than in England. But those who berate that even America now has a more benign system for students than England should not be so hasty. The majority of US loans are not income contingent, meaning that low earners who are already struggling still have to pay.

Governments throughout the world are grappling with how to fund send an increasing proportion of students to university in an era of austerity. In the last two decades at least 14 countries in the OECD, including Australia, Canada, New Zealand and the UK, have implemented major reforms to fees, according to the Sutton Trust. In general these reforms have led to students paying a greater share of the cost of their tuition. 

So in a sense what has happened in England is merely an extreme example of an international trend. And the introduction of tuition fees in 1998, which have been hiked up twice since, has been managed better than most acknowledge: indeed, the proportion of disadvantaged students at university has actually risen by one-fifth since tuition fees rose to £9,000.

But, with the poorest students in England now graduating with £50,000 in debt, more students will be driven to ask whether a university education is really worth it. For a small but significant minority, it isn’t. A recent IFS report found that male graduates from 23 low performing institutions – though it sadly declined to name them - earn less, on average, than those who do not go to university, and end up with huge debt to boot.

No matter how expensive a university education has become, not having one is even more expensive. Throughout the world demand for university education continues to soar; in England the average graduate premium is £200,000 over a lifetime. Yet too many dunce universities are saddling students with debt without giving them anything in return.    

Tim Wigmore is a contributing writer to the New Statesman and the author of Second XI: Cricket In Its Outposts.