Vince Cable has called on shareholders to get rid of corrupt executives, who he says have allowed "systematic abuse" of the banking system.

Writing in the Observer, he described the problems in the  banking sector as "a moral quagmire of almost biblical proportions", and said that shareholders now needed to take matters into their own hands, as it was clear no one at Barclays would take responsibility for the corruption that lead last week to the scandal over Libor.

He said the action of shareholders would be key, as "[r]egulators are a backstop: they don't own banks":

The governance at the top of our leading banks has been shown to be lamentably weak. No one at the top of Barclays will take responsibility for systemic abuse.

Shareholders, the owners, have a major responsibility here. I am bringing in legislation to strengthen their control over pay and bonuses, through binding votes, but shareholders have to get a stronger grip on weak boards and out-of-control executives.

Cable drew a distinction between "casino-style investment banking" and the retail side of banking, and said that government action would do the same.

He said that "cultural change" was needed throughout the system, citing the Lloyds bank network part-takeover by the not-for-profit Co-operative Bank as a possible model.

This comes amid a report from the Independent of Sunday that Michael Fallon, the Conservative deputy chairman, is on the board of a firm that that been required to co-operate with the FSA investigation into malpractice in the rates market.