As Ireland’s economy teeters on the brink of collapse there is “precious little evidence” that lessons have been learned from the UK’s own banking crisis, a committee of MSPs have claimed.
The Scottish Parliament’s economy, energy and tourism committee said it did not believe the necessary reform of banking institutions has taken place since the bailouts of 2008.
The findings are in its submission to the Independent Commission on Banking, which met in Edinburgh on Monday.
“We agree wholeheartedly that some, but by no means all, of the financial activities which proliferated over the last 10 years were socially useless and some parts of the system were swollen beyond their optimal size.
“Until that lesson is learnt, we are worried that many banks are still pursuing a relentless drive for excessive profits and bonuses, often at the expense of the taxpayer, and not serving the needs of the real economy.”
The commission, set up by the coalition government, met as part of a UK-wide investigation into reforms to make the sector more financially stable and competitive.
The committee claimed the Office of Fair Trading is “failing in its duty” to consumers and competition by not launching a full competition review into banking in Scotland.
It made recommendations including greater limits on banks’ ability to use money and assets to gamble in the markets, new rules to force banks to hold more cash reserves and banning banks from certain transactions.
The committee also said banks had not yet “got the balance right yet” in increasing lending to businesses to help recovery.
It said the committee “deplores” the continuing awards of large bonuses to senior banking staff.