As we report on the front page of Financial Mail this weekend (read the story on fmwf.com here), the centralised system of setting business rates lacks flexibility.

Gone is the local assessor who could judge the lie of the land rather than slap on across-the-board increases. Gone is the ability to appeal against a rise that – as Charlotte West in Bury St Edmunds has discovered – means shutting up shop.

Clearly, rates are a valuable source of revenue, much needed in the current environment. But tolerance to increases is variable: what the big multiples might be able to swallow with a bit of bleating is murderous to a family-owned business with only one or two outlets.

Communities Secretary Eric Pickles should rapidly change the law, introducing flexibility to save the lifeblood of our towns.

The message from both parties in Government and the Opposition is muddled

And while it is all very well for the Government to drone on about getting the loft lagged for free, other energy-saving schemes can be costly. Have you seen the price of a new boiler recently?

If you are unlucky enough to be among the millions who live in a cavity wall-less Victorian home with sash windows, there is no number of smart meters that will save you being a lifelong hostage to British Gas or EDF.

The Government’s notion that you will offset the rising unit costs of gas and electricity by reducing your consumption will be so much pie in the sky.

Short of watching TV in the dark, however, there is little you can do radically to reduce fuel bills. It is the captive nature of these charges that prompts so much fear, frustration and loathing when bills hit the doormat.

Last week’s price cuts may alleviate some of the pressure, though talk of a ‘price war’ is wishful thinking. But long term there is absolutely no doubt that bills – even for fully lagged smart meter users – are going to increase.

There is probably not much even the best-run energy companies can do about it. Profit margins average about seven per cent over the economic cycle – not rock bottom but not up there with the banks either.

And about 20 per cent of bills are nothing to do with them. They reflect the barrage of Government-mandated ‘green’ charges.

This will only get worse as there is an astonishing £200 billion of environmental energy initiatives we have to pay for.

Energy companies are not allowed to detail much of this on your bill. Of course, you wouldn’t be any better off even if they were allowed to spell out what is in truth a tax, but they might come in for slightly less hostility were the heavy hand of Government to be more transparent.

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GEORGE Osborne’s declaration to the Treasury Select Committee that he will keep close watch on bankers’ bonuses was little more than posturing.

He can trim some of the payments at 83 per cent taxpayer-owned Royal Bank of Scotland, but the bank sector has largely ignored every effort to make them toe the line.

Letting the banks off the hook is not, however, a vote winner, which is why the Chancellor and David Cameron have turned their attention to executive pay in wider corporate Britain.

Sadly their campaign is off to a poor start, based as it is on inaccurate estimates of average pay rises for chief executives. The proposal to make the pay vote at AGMs compulsory will make no difference as only a handful of these votes has ever been lost. Better to make participating in the vote compulsory for institutional shareholders.

Business Secretary Vince Cable, who will brief professional investors on his plans for remuneration reform tomorrow, appears sensibly to be rowing back from the idea of employees on remuneration committees.

Executive pay needs reform. But productive directors should not be confused with the unaccountable money shufflers whose activities have been branded ‘socially useless’ and whose pay packets are often disguised as loans or sent via an offshore haven.

By and large they are people who are responsible for huge, often global, organisations that employ hundreds of thousands of staff and generate billions in revenue. Some of them and their companies even pay tax.

Yes, some directors simply earn too much; in many cases the link between salaries and performance is far from proven; remuneration committees need to get tougher and shareholders need to be more diligent at curbing excess and certainly pay-offs to failed executives need stamping out.

But only in the most egregious of cases does the ‘money for practically nothing’ mantra of the City apply in the boardroom.

Politicians are rightly holding executives to account, but for all the wrong reasons.

There is an astonishing £200 billion of environmental initiatives

And as the pay packages of the chief executives are exposed in the annual general meeting season that kicks off in a couple of months, it will become clear that the Prime Minister is whistling in the wind.

Business Secretary Vince Cable is consulting on ways to control top pay. Sadly, however, we have already come too far for executive remuneration ever to fall back into a reasonable multiple of ordinary salaries without Soviet-style intervention against boardrooms. The best we can hope is that the rate at which board pay rises outstrip those on the shop floor can be slowed.

Figures from voting agency Manifest reveal that total remuneration for FTSE 100 chief executives rose from an average of £1 million in 1998 to £4.25 million in 2010. Average earnings rose from £290 a week to £404 and the Footsie share index went nowhere – it was 5,896 in 1999 and ended 2010 at 5,899.

The average turnover of Footsie companies grew in that period, arguably making businesses more complex to manage and therefore deserving of higher rewards.

But to talk of aligning the interests of executives with those of the shareholders is clearly tosh.

Questioning the use of share price growth as the basis for executive rewards is fraught with problems. In the couple of decades since boardroom fat cattery became an issue, an entire industry has built up around the ‘science’ of matching rewards to performance.

Highly paid remuneration consultants vie to use their particular matrix to justify huge wonga for the boss. Committees of non-executive directors buy in consultants.

And although the evidence of boardroom back-scratching is less compelling than it was a few years ago, it is rare for the chief executive of one company who sits on the remuneration committee of another to argue for a pay cut for that chief executive.

It serves them all for the merry-go-round to keep on turning – the reason Cable is considering outsiders for these committees.

We would not be where we are had the big shareholders acted decisively over the years, long before share registers became so international, making concerted action more difficult and before the arrival of couldn’t-give-a-fig hedge funds.

Sure the vote on remuneration at AGMs is only advisory – and increasingly ignored by UK plc – but shareholders have long been able to vote a director off the board. They could also vote against the report and accounts or fail to support the re-election of the auditors. These are nuclear options but do-able.

Sadly, action is also restrained by the conflicts that beset even the very good people involved in stewardship and governance. How can asset managers of a quoted company pension scheme take a tough line on remuneration when the chief executive of their parent company has just pocketed 30 per cent?

And small shareholders who can be relied on to show some common sense are all too often disenfranchised by holding shares through unaccountable collective funds.

Interestingly, the greed among the bosses of big companies is not reflected among smaller firms and entrepreneurs. Great performance, an impressive export record and the creation of jobs does not, it seems, depend entirely on the noughts at the end of a pay package.

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SPIN doctors are there to put gloss on the doings of their masters, but too often firms shoot the messenger in the hope that no one will question where blame really should fall.

After its botched attempt to buy AIA, Prudential took an axe to its PR department. BP’s head of media was ousted after its oil well disaster and last week online shopping firm Ocado replaced its external adviser.

Waitrose, whose goods Ocado distributes, now operates in Ocado’s heartland within the M25 and investors (shares down to 58.5p from the 150p float price) will want more than PR flannel when the online retailer updates on trading this week.

Whatever you think of the tents outside St Paul’s Cathedral, the Uncut protests and the Occupy Wall Street campaigners, they have focused attention on some of the iniquities and failings of our financial system. In their poorly articulated ragbag of criticisms, the protesters have questioned whether capitalism is any longer fit for purpose.

They are not the only ones. Many senior politicians are wondering whether their lifelong adherence to the mantra that markets know best should be jettisoned.

The problem for those who still believe that capitalism for all its flaws remains the best system for delivering wealth, economic advance and social progress is that that it has been flagrantly bent to the whim of a small group of insiders rather than working for the benefit of the largest number.

In the eyes of many – not just those staging demonstrations – capitalism has become synonymous with a handful of often only moderately able people earning stratospheric sums unconstrained by any civilised influence.

Clearly, the banks are in the firing line. There must be a stronger link between what someone is paid and their abilities and contribution to society. The recommendations of the Vickers commission must be implemented to minimise risk and there must be strict oversight of the new system of City regulation, which invests so much power in the Bank of England.

It is clearly unfair that our tax system allows powerful companies to relocate an often nominal head office overseas to avoid paying their fair share. Wealthy individuals frequently do likewise. Legal, I’m sure, but smelly just the same.

Government must set the tone for the way capitalism develops in this country, stressing the benefits of open markets, competition and entrepreneurship. In return, though, corporate Britain must deal more fairly with all stakeholders and play a more positive role in society.

Much of the responsibility here lies with shareholders: they should exercise far greater vigilance over financial institutions to keep risks and rewards in linel they must look further than the next interim dividend payment to judge the quality of governance; and they must never let the vested interests of managements forget that it is shareholders who own the companies and whose rules must be obeyed.

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Corporate Britain’s ability to hobble itself when it most needs to be surefooted should not be underestimated. So it is that two of our most illustrious companies – BP and Prudential – enter 2012 bedevilled by distractions.

BP ended 2011 with the shocker that its deeply unimpressive chairman, Carl-Henric Svanberg, is about to add the chairmanship of Volvo to his boardroom of duties.

This would be bad enough if Svanberg had a vice-like grip on his role at BP. As it is, he and chief executive Bob Dudley are managing this bastion of corporate Britain with all the assuredness of learner drivers heading the wrong way up a motorway.

Following Svanberg’s invisible presence in BP’s hour of need after the tragic gulf of Mexico spill, the company bungled a planned partnership and share swap with Rosneft of Russia that would have given it access to vas oil and gas fields. It topped that by failing to secure the multi-billion pound sale of energy assets to Argentina’s Bridas group.

This is not a record likely to encourage shareholders to continue supporting the £750,000-a-year chairman.

At Prudential, dogged attempts to hold out against the inevitable finally ended with the news that chairman Harvey McGrath will stand down.

As ever, if Pru can mishandle such things, it will. McGrath was clearly toast after the group’s attempt to buy Asian insurer AIA ended in failure, with a near £300 million bill to boot.

Yet despite pressure from investors – an astonishing 22 per cent voted against him at the AGM – McGrath hung on. This response to its owner is typical of the Pru, even though it would almost certainly tear out its hair at such lack of responsiveness in any company where it is invested.

A similar stutter accompanied the departure of an earlier chief executive, Jonathan Bloomer, and his chairman, Sir David Clementi.

The AIA deal would have been transformational for Prudential, as I argued at the time. But with a relatively junior chief executive it was McGrath’s role to steady nervous investors. He failed and should have gone.

Let’s hope the venerable Pru chooses better next time.

Many things may be legal but do not merit being embraced by mainstream society: prostitution, cage fighting, selling sexy underwear to under-10s are cases in point.

Many of the new payday loan firms are arguably on this same undesirable fringe. Certainly regulation to cover the behaviour of these businesses is needed, but should we really consider companies that charge the poor and vulnerable interest rates of up to 4,000 per cent any part of acceptable society?

These loans may be for small amounts and may be designed to be paid back quickly so the true horror of such a rate is not apparent. But it remains immoral to try to sanitise them, presenting them as something that most ordinary people and families would use as a matter of choice, even if some do like the speed of arrangement and don’t get stung too badly if they repay on time.

Make no mistake, many of the firms that now spend so much on high-profile advertising are pariahs in their American homeland, driven to find other global victims because their own regulators have imposed caps on the interest rates that can be charged.

The Office of Fair Trading, which ‘regulates’ the sector and will this week appear before the Business Select Committee, has no idea how many such firms operate here, lacks knowledge of how often loans are rolled over and has scant power to enforce any sanctions and suspend those behaving badly.

The payday loan firms are trying to draw fire by pointing to some of the more outrageous fees imposed on unauthorised overdrafts by High Street banks. The point is, however, that these are penalty charges for breaching an agreement. They are not a bank’s standard terms and conditions.

Driving legal loan sharks out of business would, of course, only drive the vulnerable to illegal loan sharks. We are still, sadly, a nation addicted to debt. Regulatory action is needed, and fast, to stop these vultures preying on that weakness.
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The idea of insurance is to spread risk and protect against extreme events. This, of course, involves a degree of mutualisation. We accept we may pay a year’s premiums for, say, contents insurance, even though we are not burgled nor smash a treasured antique, and that those premiums will be used to pay the claims of others.

With the exception of downright fraud, most of us understand that some are more likely to claim than others. We do not necessarily believe that all of this should be reflected in their premiums, but we do expect some reflection of risk.

That is what makes such a nonsense of the EC ruling that there should be equality of treatment for male and female drivers.

Figures released by the Government last week indicate that women will pay £900 million a year more. While they may be more likely to cruise slowly into the car in front as they apply lipstick using the rear view mirror, they are nowhere near as inclined to hit rural lanes at 100mph causing fatal collisions.

Almost certainly these idiocies will be ironed out with time as insurance in this country remains a highly competitive industry. I have little doubt, however, that the ironing out will leave all of us paying more than we do now.
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The  immediate threat to Europe’s banks may have faded, but the future of the euro and its member nations looks as perilous as ever. Without European Central Bank intervention to print money, devalue the currency and stoke a bit of inflation, weaker nations have no hope of trading their way out of their debt.

Angela Merkel may be congratulating herself for spurring greater fiscal consolidation among eurozone countries, but her victory may prove pyrrhic if the mighty German industrial machine struggles to sell its wares in its biggest market unless German taxpayers dole out to peripheral nations so they can again afford to buy BMWs and Mercedes.

Politically, this could well be a one-generation solution. Future governments may be less happy to have their budgets and taxes set and monitored by Berlin and Brussels. What self-respecting opposition party would willingly give up the right to challenge an incumbent’s economic policy?

The whole fix is doomed.

It is only a question of how quickly and messily it fails.

One last heave should do it. Although the crumbling euro appears to lurch remorselessly from one crisis to another, the single currency remains intact and, against the odds – and common sense – there is a growing conviction that it will be preserved.

Next Friday’s European Council meeting of prime ministers and leaders provides the next deadline to draw a line under the single currency’s slow suicide.

Several factors are pressing towards an endgame, suggesting that this deadline may not just come and go as others have.

First, the dramatic intervention by central banks flooding markets with dollar-dominated liquidity has made it less likely that an ailing European bank would fail.

It also gave substance to America’s growing frustration with Europe’s inability to sort out a problem that is threatening to derail the global economy.

As he heads into an election year, President Obama cannot tolerate anything that might drag his country’s nascent recovery off track. Blaming Europe might work for George Osborne, but the population of the world’s biggest economy simply wouldn’t buy it.

To underline the concerns of central bankers, our own Sir Mervyn King spoke last week in uncharacteristically apocalyptic tones about the exceptional threat to our banks and economy should the single currency fail.

On the Continent, the replacement of the burlesque Silvio Berlusconi with Mario Monti appears to have opened the way for a rather clearer dialogue between the three major economies.

And though there is still some distance to bridge, Germany and France are now flirting with a form of words that might – just might – suggest that they could cobble together a fiscal agreement to come into being at some indeterminate future time.

What also became clear last week is that the European Central Bank, under Italy’s Mario Draghi, is poised to snatch at anything resembling fiscal accord in order to throw the switch and start printing money and buying bonds – even though German Chancellor Angela Merkel would surely have to hold her nose while he did so, due to all the implications for a devaluation of the euro.

The irony is, of course, that were Draghi to signal such a massive intervention, the chances are that the markets would back off.

He might then be able to crank the printing presses far more slowly than is currently feared.
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WHETHER you call it a Private Finance Initiative, a Public Private Partnership or the latest – Pension Infrastructure Partnership – the net effect is pretty similar.

It is a way for Chancellor George Osborne to get something done using other people’s money – preferably off balance sheet and as far out of the public view as conceivably possible.

This is, of course, quite a natural instinct. Who wouldn’t want to use someone else’s money to buy a new house, pay for a car or lay a new driveway?

In a long list of financial assaults committed by his predecessor, Gordon Brown, stealing £5 billion or so a year in the form of pension credit was possibly his most toxic legacy. It may not have been the sole cause, but it certainly gave a huge push towards the end of final salary schemes.

I do hope that Osborne is not trying to pull a fast one on the savings of those schemes that still exist by offering a sub-prime investment in his desperate gamble to kickstart the economy.
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NOT content with putting at risk up to 22,000 jobs in the fledgling solar panel industry by slashing subsidies, the Government now looks likely to scythe thousands more in the lagging sector.

(Read more here)

Until now energy companies have been forced to pay for roof lagging and cavity wall insulation. That will, according to rules issued last week, soon change so they will instead subsidise solid wall insulation, a process that appears to mean nailing panels on all your walls and is rather more expensive. One leading contractor estimates that 6,000 jobs could be lost.

If this Government is serious about trying to encourage business, it must learn a basic but crucial lesson. Industry can cope with practically anything so long as it understands the rules and they don’t keep changing.

Just ask the banks, whose levy contribution is being tweaked, and the North Sea operators juggling with a new extraction tax regime.

The blizzard of initiatives in the run-up to George Osborne’s Autumn Statement this week is clearly designed to give the impression that the Government is buzzing with ideas about how to revive the economy despite its determination to stick with deficit reduction Plan A.

Most are reminiscent of Labour in that they have already been announced. Elsewhere there is the odd penny or two being carved off benefits to provide some funding. All very small and meaningless in the scale of our national woes.

The Chancellor is right to stick broadly to his deficit reduction strategy – heaven help us if the markets began to talk of Britain in the same breath as Greece or Italy. He is also right to look at how the private sector can be galvanised to help with big infrastructure projects that can be kick-started to create jobs and wealth.

The difficulty here is that though the long-term returns on infrastructure, such as airports or road building, appear to match the requirements The should carrot to the of pension funds to pay members, they must still meet stringent regulatory requirements in terms of the security of investments.

That is still far from settled and unlikely to light the economic blue touchpaper soon.

Osborne has failed to force the banks to fund small and medium-sized businesses to grow and start the much-needed hiring process. Despite national opprobrium and a couple of large dollops of quantitative easing, our banks still have their purses largely shut.

They are saving – as I would expect our highly indebted households to do were the Chancellor to cut VAT, make a tax cut or just give everyone a couple of hundred quid.

The Chancellor must now encourage business to invest. As I have said before, industry is reckoned to be nursing a cash surplus of something like seven per cent of GDP, which is not far off the total budget deficit.

Sir Roger Carr, president of the Confederation of British Industry, last week said it was time the public ended its vilification of the banks as well as energy and defence companies. Instead, he said the private sector could stamp out irresponsible behaviour and would rise to the challenge of investing to support giant infrastructure projects.

At the same time, Sir Richard Branson said he planned to establish a group of business leaders to encourage higher ethical standards. Osborne should capitalise on the idea that business has a role in mending the broken economy.

There have been suggestions that companies failing to make capital investments should be punished through the tax system. Clearly, this would be unwelcome and runs the risk of driving business offshore.

Instead, he should offer tax incentives for capital spending. It would not deprive the Exchequer as the tax break would arise only when money was spent. It would be pretty much self-funding as it would create orders for suppliers that would raise more in corporation tax and mean more jobs and higher income tax revenues.

Osborne should offer a carrot to get the business investment bandwagon rolling. How much better might we all then feel about corporate Britain.
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The traumatic goings on at Lloyds should be a lesson to all.

The appointment of Antonio Horta-Osorio at first looked inspired. He set about improving the bank’s tarnished customer reputation. He ‘fessed’ up for payment protection insurance mis-selling and handled the Independent Commission on Banking with charm.

But when the expensively recruited Portuguese sent in an indefinite sick note, chairman Sir Win Bischoff was cruelly aware that the former Santander man had sacked pretty much every longstanding Lloyds senior executive in favour of chums from the Spanish bank.

Other top brass at Lloyds were already heading for the door in pique at losing out in the race for the top job. Lloyds now lacks not only a chief executive but has others waiting to leave and new arrivals marooned.

Horta-Osorio set out a convincing customer service mission so I hope he returns. But chairmen must rein in new chief executives who want to oust the old guard.

Bosses must surround themselves with capable and supportive executives. But crucially they need to prove themselves before they scorch the boardroom with no apparent fallback.

>> Read more about Antonio Horta-Osorio here

The Rock’s computer systems are significantly larger than it currently needs and by industry standards it is hugely generously reserved.

The new management will be able to start pulling in business without having to turn to the wholesale markets, which was the ruination of Adam Applegarth’s regime.

Interestingly, research for Virgin appears to show that while the brand has predictable appeal among younger people, it also looks to have a great deal of pulling power for those in their 40s and 50s (probably the ones who remember buying vinyl discs from Virgin Records). This could prove useful as this age range is not only prosperous, but it is also not averse to seeking a better deal.

Virgin Money has shown it is capable of innovation – its Virgin One Account was in the vanguard of ‘offset accounts’. The Rock’s mortgage customers could be enticed into setting up Virgin current accounts.

Branson – interestingly again using very little of his own money – is a showman. He has the pizzazz to galvanise the public to start shifting their bank accounts in search of quality service rather than the travesty now on offer.

Clearly, questions will be asked about whether the taxpayer is getting value for money, but when taking into account rival banks’ share prices it doesn’t look too bad.

The Rock is a loss-making business (the deficit was £223 million in 2010) and its value is falling.

More worryingly, if Chancellor George Osborne reckons he is getting a fair price and is unlikely to elicit more by holding on, that really doesn’t say very much for his confidence in the near-term economic outlook.
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HOW gratifying to see energy giant BG handle its succession so very elegantly. The appointment of Andrew Gould as chairman of the highly successful outfit last month kick-started the search to replace the admirable Sir Frank Chapman as chief executive.

Chapman has surefootedly guided the company. In more than a decade at the helm he has rarely lost the plot.

He will retire in 2013 as one of our most admired business leaders having expanded a domestic oil and gas producer into an international exploration giant with lucrative contracts for liquefied natural gas as well as conventional oil and gas.

His board has now set up a very satisfactory internal search for his replacement (though, undoubtedly, the board will cast its eyes outside, too).

Chris Finlayson, head of Europe, Fabio Barbosa, chief financial officer, and Martin Houston, head honcho of the Americas, were all last week given enhanced roles to test their mettle for the top slot.

The risk is always that defeated candidates leave the company. But better to get the right person at the top and have some unhappy collateral damage than make the wrong appointment.
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DAVID Cameron and his party have been desperately burnishing their female-friendly credentials, notably with incentives for women entrepreneurs and initiatives to support Lord Davies’s drive to increase the number of women in the boardroom.

How very ill-judged, then, that the Prime Minister should argue in the House of Commons that an increase in the number of women directors would help to drive down boardroom pay.

I hope he means that women will question the back-scratching boys’ club of executives and their pay consultants who seem to secure huge rises for directors year in year out regardless of their companies’ performance.

However, many fear that Cameron’s remark betrayed the fact that he expects women to join boards in a junior and less well remunerated role, reflecting the pay gap that is so evident across Britain.

Women’s support for the Tories is dwindling as they disproportionately find themselves in the firing line of public sector job cuts and increases in pensionable age.

Cameron should take care not to alienate them any more.

While the Chancellor will set out a template for growth, this will be limited both by his austerity demands, and by the dramatic decline in growth now likely in Europe, our single biggest export market.

So threatening is the turmoil that President Obama spent much of last week on the phone to Angela Merkel and President Sarkozy, imploring them to get on and sort out the chaos.

With his re-election campaign about to kick off, Obama is unhappy that economic turf wars within the eurozone may threaten his own country’s anaemic recovery.

As Greece and Italy this weekend welcome unelected mandarins as new government heads, there are signs that some euro turbulence is beginning to settle down. Despite the heart-stopping daily gyrations, non-hysterical observers increasingly believe Europe’s woes will be sorted out.

The betting has to be on Germany giving way and allowing the European Central Bank to buy an unlimited quantity of bonds issued by any nation within the eurozone. Like the Bank of England’s quantitative easing, this will unleash a flood of money, increase inflation and devalue the euro.

Though Germany, with a collective memory of Weimar wheelbarrow loads of marks, loathes the idea of letting rip in such a manner, it is the only way the euro can survive. And despite German hostility, devaluation of the euro would, of course, give another boost to that country, which only recently got knocked off its perch as the world’s biggest exporter by China.

Whether Obama will be as happy at a sorted-out Europe, which means discounted BMWs all round in America in the run-up to his election night, is not so clear.

I’M beginning to have my doubts about how sure-footed is Marc Bolland, Dutch boss of Marks & Spencer. His decision to advertise on the increasingly tacky X Factor in a way that seeks to link the store with the participants was always going to be high risk.

Now that contestants are starting to be thrown out over drug-related claims, Bolland’s argument that this is a midmarket family show that viewers watch as they tuck into their M&S supper for two doesn’t stack up.

The redesign of stores – at £1 million or so a pop – is also making a full pitch for younger shoppers. All M&S bosses have a go at this, but Bolland’s prices are too rich for most younger shoppers, who still prefer the disposable fashion of Zara or H&M.

And quite what are we supposed to make of Marcel Wanders, Bolland’s latest import from his native country?

Against a tacky star-spangled backdrop, Wanders looks more like a Fifties magician on stage at the London Palladium than a top-class international designer of repute. The goods being marketed in the tasteless stores within stores would look more at home in a Cairo bazaar than on an English High Street.

Bolland is right to try to stretch the M&S brand into new territory and to encourage younger, affluent shoppers over the threshold. His approach, however, hardly gives room for confidence.
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It is hard not to feel queasy as our vilified bankers gang together to produce a new ‘charter mark’ for professional standards. (Click here to read our story)

Is this – as with Bob Diamond’s Damascene conversion in BBC Today’s inaugural business lecture – so much window dressing?

And just how long will it take before the proposed ethical standards are ingrained so that bankers behave properly and safeguard their clients, rather than flogging anything so long as it stays just about on the right side of the law?

I am going to take a deep breath and hope that the initiative to set new professional and ethical standards for bankers makes an improvement.

As a minimum, the bar should be raised for new entrants to the industry. Customers, too, should come to expect better.

And I hope that when the Vickers report arrives, customers will be able to swap accounts to a bank they feel reflects the standards and quality of behaviour they seek.

Leading banks have agreed a new code of ethical behaviour that will see the launch of professional qualifications and could mean tough sanctions for individuals and companies falling short of standards.

A joint venture between nine of Britain’s leading banks and the Chartered Banker Institute, which is based in Edinburgh and claims to be the oldest professional banking body, is seeking to raise the quality of behaviour of bankers in an effort to increase public confidence.

‘In the wake of the financial crisis, the banks’ biggest collective challenge is to rebuild customer trust and public confidence,’ said the organisation.

‘Our customers, colleagues, regulators and shareholders want to see a banking industry built on a solid foundation of ethical professionalism.

‘They want to see banks and bankers supporting customers whilst lending responsibly, acting as trusted advisers to individuals and businesses and playing a positive role in the community.’

The banks were criticised for having been at the heart of the credit crunch and were condemned as ‘socially useless’.

Now the new board is aiming to establish standards of individual and corporate behaviour that can be judged across the industry.

The founder banks behind the initiative are Barclays, HSBC, Clydesdale, ING Direct, Lloyds, Santander, Tesco, Royal Bank of Scotland and Virgin Money. They have about 70 million customers and employ 350,000 staff.

The organisation is chaired by Susan Rice, managing director of Lloyds Banking Group Scotland. The board includes Sir Sandy Crombie, senior non-executive at Royal Bank of Scotland and former chief executive of Standard Life; Benoit de Vitry, chief operating officer of Barclays Capital; Jayne-Anne Gadhia, chief executive of Virgin Money; and Sandy Flockhart, chairman of HSBC.

The idea is to mimic self-policing schemes such as the British Medical Association whereby professionals can be stripped of their qualifications in a humiliating and potentially career-destroying move if they are found to breach the new code.

The remit will cover all areas of banking and may be applied by member banks overseas.

The Chartered Banker Professional Standards Board is currently recruiting for executives to establish an advisory board that will develop professional standards and try to raise public awareness of the initiative.

It expects to have the advisory board in place by the middle of 2012 and to establish a permanent administration to monitor a series of professional standards by the end of next year.

Those banks signing up will be assessed every year by the Chartered Banker Institute to ensure that they and their employees are conforming to the code.