Professor Philip Lane:

I will make a few points. The supervisory model we have now involves many more staff, much greater resources and much more intrusion in terms of the level of inspections and so on.

If we had the system we have today back then, I hope we would have taken a more comprehensive and systemic approach. I do not disagree that, in retrospect, more could and should have been done. However, I would point out that our enforcement and regulatory powers are now more extensive. If a problem is observed at the time, we can take action. The framework for the kind of systemic review we are doing now is much more achievable today than it was then.

I think we have to take lessons from this episode. I emphasise that the main reform which needs to take place after we have concluded all the enforcement actions that may arise from this episode is that the culture of banks in many western banking systems and around the world needs to be adapted and reformed. We are trying to play our part in that so that banks truly put their customers first. If there is a contract that has some readings which are customer-friendly and others which are less so, there should be an onus on ensuring the culture of the organisation in question is customer-orientated. It should not have to come to consumer protection. It should be partly about enforcement and partly about inspection. We want to reach a point at which the boards of these financial firms no longer see it as acceptable for the banks to have a culture of behaving in this way. This episode has been very costly for the individuals concerned. At this point, the focus is on redress and compensation for those people. We also have a focus on enforcement against the institutions concerned. I agree with the Deputy that lessons need to be learned about the behaviour of the banks and how responsive we should be to incipient problems.