António Horta-Osório said banks had let the public down by becoming “complacent, non-customer focused and inefficient”.
Speaking at the CBI Scotland annual dinner, the boss of the 41 per cent taxpayer-owned bank said: “The banking industry has done itself no favours. Issue by issue and scandal by scandal, the faith and trust in our industry has been eroded.” To restore trust, “the industry must change. We must recast the banking model … retail and commercial banks should be simple and they should be boring”.
His comments came after the bank revealed earlier this week that it is scrapping bonus schemes which the Financial Services Authority claimed encouraged mis-selling.
Horta-Osório, who has been Lloyds chief for 18 months, acknowledged that pay had “contributed to the problems the industry has experienced with mis-selling”, saying banks had “focused too much on sales targets”. In future, pay will be “increasingly linked to the long-term performance of the bank … and capable of being clawed back where decisions turn out to have damaged the bank’s performance or adversely affected customers”.
The Lloyds head man also carried echoes of former Barclays chief executive Bob Diamond’s call last year for banks to be “better citizens”. Mr Diamond was forced out of Barclays two months ago after regulators decided they could no longer tolerate its aggressive, high-risk culture.
The CBI responded to this speech, with John Cridland, CBI Director-General, saying: “This timely speech rightly recognises that some banks may have lost sight of their core values and is a thoughtful assessment of the critical steps that need to be taken to restore confidence in the banking system.
“A healthy and respected banking system is essential to support economic growth. Businesses want banks to provide transparent and straight-forward products and services, and a culture that is built around the customer.
“We all want to see our banks re-build public trust, re-define their core values and live by them, as the best banks do.”
